MiFID II Switzerland

MiFID II Switzerland

Since MiFID II has a very wide scope, it can be approximately divided into two areas of focus: trading firms (OTC and commodity derivatives) and retail banking and investment advisory. FinfraG regulates the trading aspects of MiFID II in Switzerland and contains the EMIR clearing and transaction reporting requirements. FIDLEG focuses on the retail banking aspects which are covered in MiFID II. MiFID II Switzerland may be impacted in the following areas:

MiFID II Switzerland trading firms

Swiss trading firms may focus on the following key aspects in regards to MiFID II Switzerland:

  • Systematic internalizer classification, Not yet defined in FinfraG or FIDLEG
  • Multilateral Trading Facilties (MTF) FinfraG contains the MTF definition
  • Organized Trading Facilities (OTF) FinfraG contains the definition of an OTF
  • C6-Excemptions: Commodities traded on an EU OTF fall under some exemptions until 2020
  • C7 classification status: Commodities traded on non-EU facilities always fall into the C7 category (no exemptions)
  • Commodity derivatives trading on EU-facilities:
    • It is expected that the daily position reporting to trading facilities will apply to foreign participants of EU trading facilities as well
    • For the position limits, EU-external parties may be able to apply for the exemption in the same way non-financial firms only performing hedging do
    • Commodity derivatives limits are not yet defined in FinfraG, this however is in discussion and an update to FinfraG can be expected.

MIFID II Switzerland investment advisory

Swiss retail firms may focus on the following aspects when considering MiFID II in the EU:

  • FIDLEG is planned to be in effect at the same time as MiFID II (Jan 2017)
  • Client classification rules will be in place
  • Firms will have to decide under MiFID II whether they choose to provide their advice on independent basis or not
  • Ban of inducements for independent advice and proof of independence
  • Product governance procedures
  • Swiss investment firms may have to apply for an EU-license at ESMA if they decide to offer their services in the EU
  • ESMA may approve or ban certain financial instruments for marketing, sale or distribution
  • New procedures for the recording of electronic communication
  • This requires the business processes to be redeigned in an efficient and scalable manner
  • In FIDLEG, an ombud system is planned which is funded by the investment firms

Read more about FinfraG here.