Self-regulation involves private organisations setting rules autonomously or in cooperation with the state. It constitutes a means of reconciling the frequently diverging interests of the organisations in question and those of the state. Self-regulatory regimes exist in the following segments of Swiss financial market legislation:
FINMA distinguishes between three types of self-regulation:
The state plays a role in the latter two types, which are therefore also referred to as co-regulation; both come under FINMA’s supervisory remit.
The Financial Market Supervision Act (FINMASA) expressly anchors self-regulation in the law (Art. 7 para. 3 FINMASA). FINMA thus supports self-regulation and allows it sufficient scope where this is deemed to be appropriate.
Article 7 para. 3 FINMASA allows FINMA to recognise self-regulation as a minimum standard. These standards then apply not only to members of the self-regulatory organisation (SRO), but also to all other organisations in the sector. Compliance with recognised minimum standards is enforced by FINMA or the SROs.
The legislator tasks the SROs with compulsory self-regulation on specific issues. Mandates of this type are to be found in the Banking Act (Art. 37h, Securing of deposits), the Stock Exchange Act (Art. 4 para. 1, Appropriate organisation), the Ordinance on Collective Investment Schemes (Art. 4 para. 3 CISO, Requirements for the simplified prospectus for structured products) and the Anti-Money Laundering Act (Art. 25 AMLA, Stipulation of compliance with the duty of due diligence). FINMA’s approval is required for compulsory self-regulation.
FINMA calls upon the SROs to abide by certain regulatory principles when adopting new rules – especially if these are to be recognised. These principles are set out in the Guidelines on Financial Market Regulation. Self-regulatory rules must be transparent and easy to understand; the views of those affected by a regulation must also be sought.
Recognition by FINMA enhances the legitimacy, effectiveness and credibility of self-regulatory standards. It also ensures that they are viewed both in Switzerland and abroad as equivalent to state regulation. Stakeholders will also accept rules more readily if they have been drawn up by industry representatives working with FINMA.