FINMA Publishes Minimum Standards For Asset Managers

by Ulrika Lomas, for LawAndTax-News.com, Brussels

16 January 2009

The Swiss Financial Market Supervisory Authority (FINMA) is to publish a circular on the benchmarks for minimum standards for self-regulation in the asset management industry, the regulator announced on Thursday.

In its circular “Benchmarks for Asset Management", the FINMA sets out minimum standards to guide industry organisations in drawing up their own self-regulation provisions. The FINMA circular defines minimum requirements, in particular with respect to duties of loyalty, due diligence and information provision obligations, in addition to remuneration for asset managers. Furthermore, it demands binding processes for self-monitoring throughout the industry.

FINMA noted that asset managers in Switzerland consist of various industry organisations, and in terms of self-regulation, different approaches have been standard practice hitherto. These FINMA benchmarks now form a basis for recognising different sets of regulations as a minimum standard and achieving a certain degree of equivalence in these standards.

FINMA said that the publication of the circular addresses a long-standing market requirement. The regulator's announcement added:

"The basic principles proposed by the Swiss Federal Banking Commission in the hearing on the circular (September 5, 2008) received a generally positive response from the market. The changes are mainly to the specific details. The circular will also bring a change to the way the Swiss Bankers Association (SBA) regulates itself. The SBA will have to amend its provisions regarding the remuneration of asset managers."

"Industry organisations will have to adhere to these new benchmarks in order for the FINMA, to recognise their minimum asset management standards as such. They should be considered a benchmark for supervisory authorities, or a 'minimum standard for minimum standards.' The aim is for all completed applications from industry organisations submitted by the end of February 2009, to be presented to FINMA in April 2009 and then recognised where appropriate."

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