News 2008

Update: Frequently Asked Questions regarding Structured Products
The SFBC updates the list with frequently asked questions regarding structured products according to art. 5 Capital Investment Schemes Act (CISA) and art. 4 Capital Investment Schemes Ordinance (CISO) (cf. in particular the new questions/answers 2, 13, 14 and 15).

SFBC Bulletin 51
The SFBC published its latest bulletin on various decisions, including issues related to international cooperation, fit and proper activity, churning, illegal acceptance of public deposits as well as structured products.

FINMA ready for launch
The new Swiss Financial Market Supervisory Authority (FINMA) will commence operations on 1 January 2009. On that date, the Federal Act on the Swiss Financial Market Supervisory Authority (FINMASA), which the Swiss Parliament approved on 22 June 2007, will go into full legal force. The effect of the Act is to merge three bodies – the Federal Office of Private Insurance (FOPI), the Swiss Federal Banking Commission (SFBC) and the Anti-Money Laundering Control Authority – into the Swiss Financial Market Supervisory Authority FINMA. Until their merger and incorporation into FINMA, these three authorities will retain responsibility for their own areas of activity.

SFBC and large banks agree to set higher capital adequacy targets and introduce a leverage ratio
The Swiss Federal Banking Commission (SFBC) has agreed with Credit Suisse and UBS to raise current capital adequacy requirements and introduce additional elements to the regime. The new capital adequacy ratios were defined and communicated by the SFBC to the two banks with a formal decree on 20 November 2008. They must be complied with by the year 2013 subject to the profits earned in future periods.

SFBC decides changes in the Circular on "Market Behaviour Rules for the Securities Market" (SFBC-Circ. 08/1)
In order to avoid further misunderstandings on how to apply the Circular on securities transactions on behalf of clients, the SFBC decided to clarify with an amendment, that in case of obvious indications that securities trading on behalf of clients is incompatible with the requirements stipulated in sections III to V, the securities dealers in question must clarify the commercial background of the transaction and, if necessary, abstain from executing the trade for the client; a systematic control of client transactions is not required.

The amendment will come into force on 1 December 2008.

SFBC takes measures to protect investors of the Swiss Branch of Kaupthing Bank
The turbulences around the Icelandic Group Kaupthing have consequences on its branch, established in Switzerland last July. Due to the liquidity constraints of the whole group, as well as subsequently of its Geneva branch, the SFBC has appointed two Commissioners. It will be their task, to establish transparency about the financial situation of the branch and to safeguard its assets. In the meantime, the bank (branch) has been ordered to refrain from executing any further payments. Exempt from this order are claims below CHF 5'000. Claims up to CHF 30'000 are covered by the Deposit Insurance Scheme of Swiss Banks. The Commissioners shall - together with the Deposit Insurance Association - aim at a speedy payment of such insured deposits.

On the Website of the Commissioners (www.kaupthing-geneva.ch) you will find more information.

SFBC Newsletter no 46
FATF statement of 28 February 2008 concerning Uzbekistan, Iran, Pakistan, Turkmenistan, São Tomé and Principe and the northern part of Cyprus
The SFBC reminds the financial intermediaries under its supervision to take the Financial Action Task Force's statement of 28 February 2008 concerning the lack of comprehensive the AML/CFT systems in Uzbekistan, Iran, Pakistan, Turkmenistan, São Tomé and Principe and the northern part of Cyprus into account in their assessment of risk of money laundering and terrorist finance according to the Anti-Money Laundering Act and the SFBC Money Laundering Ordinance.

SFBC Newsletter no 46 (in German or French)

FATF statement of 28 February 2008

SFBC publishes new Circular on "Market Behaviour Rules for the Securities Market" dated 19 March 2008 (SFBC-Circ. 08/1)
The Circular sets out rules on market behaviour, gives guidelines on how to avoid market abuse and defines accepted market practices. The rules are based on the requirement to conduct business in a fit and proper manner; they are part of the supervisory regulation, more specifically of the market supervision regulation. The new SFBC-Circ. 08/1 will come into force on 1 May 2008.

SFBC-Circ. 08/1 "Market Behaviour Rules for the Securities Market" (in German or French)

Senior Supervisors Group: International Report on disclosure practices in connection with market turbulences
Senior financial supervisors from five countries (collectively the “Senior Supervisors Group”) today issued a report that reviews the disclosure practices of financial services firms concerning their exposures to certain financial instruments that the marketplace now considers to be high-risk.

This report – “Leading-Practice Disclosures for Selected Exposures” – provides examples of current leading practices in the reporting of information about exposures associated with such instruments as collateralized debt obligations, residential mortgage-backed securities, commercial mortgage-backed securities, other special purpose entities, and leveraged finance loans.

This work was undertaken in response to a request from the Financial Stability Forum.

Leading-Practice Disclosures for Selected Exposures

SFBC survey on the audit of banks and securities dealers
The SFBC carried out a survey on the audit 2006 based on datas provided by the audit firms.

Analysis of the survey results (in German or French)

Chart 1 (g / f), Chart 2 (g / f), Chart 3 (g / f), Chart 4 (g / f), Chart 5 (g / f), Chart 6a (g / f), Chart 6b (g / f), Chart 7 (g / f), Chart 8 (g / f), Chart 9 (g / f), Chart 10 (g / f)

Forex dealers - the amendment to the Banking Ordinance entered into force
The SFBC points out that the amendment to the Banking Ordinance concerning forex dealers entered into force on April 1st, 2008. Dealers who accept money from their clients to handle forex transactions are now governed by the Banking Law. They must register at the SFBC within three months. Within 1 year, they have to comply with the Banking Law requirements and file a banking license application.

News of the Federal Department of Finance (in German or French)

Amendment to the BO (in German or French)

Report (in German or French)

Romain Marti is leaving the Swiss Federal Banking Commission (SFBC)
Romain Marti, Deputy Director, resigned for the end of September 2008 after more than thirty years with the Secretariat of the Swiss Federal Banking Commission (SFBC). As of the beginning of October, he will start a new professional activity as a consultant with Pictet & Cie in Geneva.

Annual media conference of the SFBC
On 1 April 2008, the SFBC released its Annual Report 2007 and held a Media conference. The chapter on the key themes of the report is available in an English translation. The full report may be consulted in either German or French. Please find below the speeches given at the Media conference.

Media release (in German or French)

Speech by Eugen Haltiner, Chairman

Speech by Daniel Zuberbühler, CEO

Annual Report 2007 - Key themes

SFBC Publishes its Report on SFBC-Commissioned Experts
The SFBC has been making increasing use of commissioned experts in its financial market enforcement, especially since the amendment of the legal provisions governing commissioned investigators came into force in mid-2004. The report on SFBC commissioned experts presents an overview of the experiences made with this new instrument.

Report on SFBC Commissioned Experts (in German or French)

Summary (in English)

SFBC renounces definitively to regulate the performance fee
After the consultation process, the SFBC has decided to renounce definitively to regulate the performance fee. The practice in this matter applied to Swiss and Foreign Collective Investment Schemes is abrogated as of April 1st, 2008. The Appendix II “Performance fee” of the Guideline for the applications of Investment funds will therefore be suppressed and the other guidelines adapted. The applicable criteria for the performance fee are left to the market's participants. As required by CISA and the Guidelines of the Swiss Funds Industry, the licensees will have to indicate in the collective investment scheme’s documents the nature, the amount and the calculation of a potential performance fee.

SFBC finds that Laxey Partners Ltd et alii infringed their duty to disclose
The Swiss Federal Banking Commission (SFBC) ruled on 7 March 2008 that Laxey Partners Ltd et alii (Laxey) infringed their disclosure obligations under Art. 20 of the Stock Exchange Act when building their stake in Implenia AG by using contracts for difference with underlying Implenia AG shares mainly during the first quarter of 2007. The SFBC will, as a result, file a criminal complaint with the Federal Department of Finance as required by law.

Release

Senior Supervisors Group: international report on risk management
Senior financial supervisors from five countries today issued a joint report under the title “Observations on Risk Management Practices during the Recent Market Turbulence”. The report assesses a range of risk management practices among a sample of major global financial services organizations.

Release

Report

Takeover Chamber of the SFBC has prolonged the tender offer procedure in the matter Implenia AG
Within the framework of the current tender offer of LIL Investments No. 4 Ltd, the Swiss Takeover Board (TOB) especially required in its recommendation dated 20 December 2007 that the offeree, Implenia AG, publishes an intermediary report by 18 January 2008 at the latest. Implenia AG challenged this point of the recommendation. On 12 February 2008, the Takeover Chamber of the SFBC mainly decided that Implenia AG must publish its non-audited 2007 end of year statement as an updated report of its finances by 16 February 2008 at the latest. The tender offer procedure is, as a result, prolonged until 29 February 2008.

Decision dated 12 February 2008 (in German)

SFBC Circular 05/2 "audit reports" / Adaptation to statement of capital Basel II
With effect on 31 January 2008, the SFBC Circular 05/2 "Audit reports" has been adapted to the new statement of capital, which will be mandatorily applicable the first time on 31 March 2008. The adaptations solely concern the key figures system in Appendix 3 of the circular. At the same time, the English version of this circular as well as SFBC Circular 05/1 "audit" have undergone minor textual revision.

SFBC Circular 05/1 "audit"

SFBC Circular 05/2 "audit report"

SFBC publishes report on bank insolvency
This report presents an overview of experience gathered to date by the SFBC with the new Swiss bank insolvency law that came into force on 1 July 2004. It also examines some issues which the SFBC believes are important with respect to international bank insolvencies.

Report on bank insolvency

The SFBC adopts amendments to the SFBC Money Laundering Ordinance
The SFBC releases amendments to the SFBC Money Laundering Ordinance (MLO SFBC) adopted on December 20, 2007, aiming to implement the Recommendations of the Financial Action Task Force (FATF) in the banking sector. The amendments to the SFBC Money Laundering Ordinance are scheduled to enter into force on July 1, 2008.

Takeover Chamber of the SFBC is reviewing the rejection of TOB-recommendation regarding Sulzer AG dated 6 December 2007
In its recommendation dated 6 December 2007, the Swiss Takeover Board (TOB) especially stated that Sulzer AG, as a result of the conclusion of the Stand Still Agreement dated 10 October 2007, is together with Everest Beteiligungs GmbH and Renova Industries Ltd. a member of an organized group according to art. 32 para. 1 SESTA in relation with art. 27 SESTO-FBC. The parties challenged the recommendation; the Takeover Chamber of the SFBC is reviewing the matter.

Takeover Chamber of the SFBC is reviewing the partial rejection of TOB-recommendation III regarding Implenia AG
Within the framework of the current tender offer of LIL Investments No. 4 Ltd, the Swiss Takeover Board (TOB) especially required in its recommendation dated 20 December 2007 that the offeree, Implenia AG, publishes an intermediary report by 18 January 2008 at the latest. Implenia AG challenged this point of the recommendation. The Takeover Chamber of the SFBC is reviewing the matter; the tender offer procedure continues.