Answer ... The foreign alternative investment fund (AIF) business (including all non-Swiss domiciled funds) in Switzerland is mainly governed by:

• the Financial Services Act (FinSA);
• the Financial Institutions Act (FinIA);
• the Collective Investment Schemes Act (CISA); and
• their associated ordinances.

FinSA, FinIA and CISA are framework laws that leave many matters to be regulated in detail by the associated ordinances. In addition, the Swiss Financial Market Supervisory Authority (FINMA) has published several circulars addressing specific areas of collective investment schemes; and market participants must also comply with Swiss self-regulations (ie, standards defined by the Swiss Funds and Asset Management Association (SFAMA) or by the Swiss Bankers Association and recognised by FINMA as minimum standards).

Answer ... The Swiss regulatory regime distinguishes between open-ended and closed-ended collective investment schemes. The main differences between open-ended and closed-ended collective investment schemes concern:

• the rules on the redemption of shares/units of collective investment schemes;
• the legal structures; and
• the licensing requirements, depending on what types of investor are targeted in Switzerland with respect to foreign AIFs.

The offering and advertising of foreign AIFs to retail clients require prior authorisation from FINMA, which includes the appointment of a Swiss representative and a Swiss paying agent. By contrast, the offering and advertising of foreign AIFs to institutional clients or professional clients in general do not trigger an obligation to appoint a Swiss representative/Swiss paying agent or to register such foreign AIF with FINMA. An exemption applies if foreign AIFs are targeting Swiss high-net-worth individuals and private investment structures created for them without professional treasury operations(including structures such as trusts, family offices and domiciliary companies) through an opt-out declaration. In such cases, foreign AIFs must appoint a Swiss representative and Swiss paying agent in Switzerland, but need not register with FINMA.

Answer ... In general, the new Swiss regulations, which entered into force on 1 January 2020, govern the offering and advertising of foreign AIFs in Switzerland (subject to certain exceptions due to the application of transitional provisions until 31 December 2022). Furthermore, the new regulations comprehensively regulate for the first time the cross-border provision of financial services by non-Swiss financial service providers to clients in Switzerland, as well as the production of financial instruments for the Swiss market by non-Swiss producers.

Answer ... Yes. By way of example, FINMA and the Securities and Futures Commission of Hong Kong (SFC) have entered into a cooperation agreement which came into force on 2 December 2016, and promotes cooperation between the two authorities and reciprocal market access for the respective fund providers. In signing this agreement, FINMA and Hong Kong’s SFC recognise the supervisory regimes for asset managers of collective investment schemes and securities funds in Switzerland and Hong Kong as fundamentally equivalent. This creates a framework within which authorised Swiss asset managers can manage collective investment schemes marketed to retail clients in Hong Kong, while fund managers in Hong Kong are granted reciprocal rights in Switzerland.

Answer ... The foreign AIF business in Switzerland is mainly supervised by FINMA, as the competent regulatory body and supervisory authority. Investor protection, transparency and market effectiveness are also assured by Swiss self-regulations (eg, market participant standards defined by SFAMA or the Swiss Bankers Association recognised by FINMA as minimum standards), by the Swiss representatives and by the Swiss paying agents. In particular, a Swiss representative must:

• be authorised by the FINMA and provide access to the Swiss market;
• provide for a place of performance and jurisdiction;
• ensure compliance with Swiss regulations;
• coordinate all communications and notifications from FINMA; and
• provide a point of contact for Swiss investors (eg, which provides fund documents and deals with investor complaints).

Furthermore, a Swiss paying agent must be a Swiss bank authorised by FINMA and grant Swiss investors the opportunity to subscribe or redeem shares/units through the Swiss paying agent.

Answer ... FINMA is in regular contact with other regulators and has entered into cooperation agreements with its counterparts in other jurisdictions (see also question 1.4).