Swiss Traditional Financial Services Licenses. Switzerland is renowned for its robust financial services sector, characterized by a comprehensive regulatory framework that accommodates a wide range of financial activities. Excluding licenses related to banks, insurances, and digital blockchain technologies, the country offers a variety of traditional financial services licenses.
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These licenses cater to specific activities within the financial industry. Asset management and securities dealing to trust management and collective investment schemes administration.
A distinctive feature of the Swiss licensing system is the “waterfall principle.” Under this principle, holding a higher-tier license inherently includes the permissions of all lower-tier licenses.
This means that entities with a higher-level license can engage in a broader scope of financial services activities without the need for additional licenses for those lower-tier activities.
This hierarchical structure simplifies the regulatory landscape for financial service providers and enhances the efficiency of the financial market’s operation.
The table below provides an overview of the traditional financial services licenses available in Switzerland, detailing the scope of activities each license permits.
This table excludes specific sectors such as financial market infrastructure, banking, insurance, and fintech and digital blockchain licenses. focusing instead on the core traditional financial services that form the backbone of Switzerland’s financial industry.
License Type | Description |
| Swiss SRO Regime | Traditional Financial Services Asset Management (up to 5 million above this amount need portfolio license). Financial Advisor including client introductory services to bank. Services related to payment transactions. Exchange, carries out credit transactions. Gold, Precious Metal and, commodities trading, hold securities on deposit or manage securities. Crypto Related Financial Services Trading, Exchange, and Brokerage Services. Crypto Wallet Services (Non-Custodial Wallet Services or Custodial Wallet Services with limitation). Stacking Services, offline or online. Crypto or Fiat Payment or Merchant Solutions. Crypto asset collateralized loans, Staking-Backed Loans and crypto related Advisory Services. |
| Swiss Portfolio License | Asset Manager in Switzerland. Discretionary Management of Client Portfolios. Investment Advice, Asset Allocation and Risk Management… Limited fund manager: The possibility of benefiting from the ‘De Minimis’ rule. This rule allows firms managing funds below certain thresholds to provide fund management with a portfolio license. The thresholds are: Leveraged assets under management of less than CHF 100 million. Unleveraged funds, with no redemption rights exercisable for five years, and assets under management below CHF 500 million |
| Swiss Trust License | Enables entities to professionally manage trusts and provide related services. Include the management of trust assets. Trust Management: This is the core function of a trustee, involving the administration of a trust according to the terms set out in the trust deed. This includes managing the trust’s assets, ensuring the trust’s purposes are fulfilled. Trustee must act in the best interests of the beneficiaries. A trustee can manage multiple trusts. Holding a FINMA Trustee License allows a trustee to manage several trusts. Each Trust with its own set of terms, beneficiaries, and asset portfolios. The Trustee must be wary to Comply with Each Trust’s Terms: The trustee must manage each trust in accordance with its specific terms and purposes. He must ensure that the needs and interests of the beneficiaries of each trust are met. of Potential Conflict of Interest Management: It is crucial to manage conflicts of interest that may arise when managing multiple trusts. The trustee must ensure that decisions for one trust do not adversely affect another. Also he must ensure that each trust is treated fairly and independently. Fiduciary Duties: Trustees hold legal title to the trust’s assets and are obligated to manage these assets for the benefit of the beneficiaries. This involves an elevated level of fiduciary responsibility and ethical conduct. Investment Management: Depending on the terms of the trust, trustees may also be involved in making investment decisions for the trust’s assets. This could include managing a portfolio of investments, buying, and selling assets, and making other financial decisions. |
| Swiss CISA Fund License | Allows for the management, distribution, and administration of collective investment schemes. This include mutual funds or investment funds, in compliance with the Collective Investment Schemes Act (CISA). LIMITED QUALIFIED INVESTOR FUNDS L-QIFs . This is a new feature. Fund Manager can create as many funds they want without having to apply for Finma permission. This allows for Increased Flexibility: The exemption from FINMA authorization allows for greater operational flexibility in setting up and managing L-QIFs. This can facilitate more innovative and diverse investment strategies. Increased Speed to Market: Without the need for regulatory approval processes, L-QIFs can be brought to market more rapidly, which is a significant advantage in a dynamic investment environment. Lower Costs: By circumventing the lengthy and often costly authorization process, L-QIFs can potentially reduce regulatory and administrative expenses, making them an attractive option for fund managers. Access to Qualified Investors: L-QIFs are limited to qualified investors, which in Switzerland encompasses a broad spectrum due to the low threshold for qualifying as a “qualified investor”. This access to a potentially large and more sophisticated investor base can be advantageous. Besides Switzerland being a pragmatic country, retail investors can become qualified investors by simply signing a letter that they want to be treated as such. Tax Efficiency: Switzerland’s favorable tax regime can make L-QIFs an attractive option for tax-efficient fund structuring.
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| Swiss Security Dealer License | Authorizes the holder to trade securities on behalf of clients or for their own account, providing brokerage, dealing, and underwriting services. Trading Securities: The license permits the holder to buy and sell securities, such as stocks, bonds, and derivatives, on behalf of clients or for their own account. This includes executing trades on stock exchanges and over the counter (OTC) markets. Brokerage Services: Firms with this license can function as brokers, facilitating transactions between buyers and sellers of securities for a commission. They can provide clients with access to both domestic and international markets. Investment Advice: Security dealers are authorized to provide investment advice to their clients. They can recommend the purchase or sale of specific securities based on analysis and the goals of the client. Asset Management: While primarily focused on trading and brokerage, entities with a security dealer license may also offer asset management services. They can manage portfolios of securities according to the client’s investment objectives. Underwriting Services: The license allows firms to underwrite new issues of securities. This mean they can guarantee the sale of new stocks or bonds by purchasing them directly from the issuer and selling them to investors. Market Making: Security dealers can act as market makers for specific securities. They can provide liquidity to the market by offering to buy and sell securities at all times at publicly quoted prices. Financial Analysis and Research: Firms can conduct financial research and analysis. Custody and Administration Services: They may also offer custody services, holding securities on behalf of clients. They can also perform related administrative tasks such as dividend collection and executing corporate actions. |
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