Principle-based regulation

Besides its primary function as a supervisory body that monitors compliance with financial market legislation, FINMA also has regulatory powers. The guiding principles for FINMA’s regulatory activity are defined through the Financial Market Supervision Act and its implementing provisions, as well as the financial market laws and ordinances. In the financial market sector, the overall responsibility for regulatory projects at the level of laws and Federal Council ordinances rests with the Federal Department of Finance (FDF) and the State Secretariat for International Finance (SIF).

FINMA ordinances and circulars

In accordance with Article 7 of the Financial Market Supervision Act (FINMASA), FINMA may regulate through ordinances and circulars.

FINMA issues ordinances where it is authorised by overarching legislation to enact legislative provisions. In doing so it fulfils a mandate granted by the legislator, who defines the limits of FINMA’s regulatory competence in a given case. FINMA’s ordinances serve to spell out technical details and are of secondary importance (cf. Article 5 para. 1 Ordinance to FINMASA).

FINMA uses circulars to describe how it interprets financial market law. Circulars do not therefore embody any new right or obligation not already set forth in the overarching legislation. In line with the principle of legitimate expectations, circulars are binding on FINMA, however, so creating legal certainty for supervised entities (cf. Article 5 para. 2 Ordinance to FINMASA).

The current FINMA ordinances (as well as any previous versions) can be found in the Classified Compilation of Federal Legislation (SR). FINMA’s current circulars can be accessed on this website. Any previous versions will be filed in the archive.

Principles of regulation

FINMA regulates only when this is necessary to meet its supervisory goals and with a view to the risks. Wherever possible, it designs its regulations in a competition- and technology-neutral way and takes into account the repercussions for the sustainability and international competitiveness of the Swiss financial centre. In accordance with Article 7 FINMASA, when enacting regulations FINMA takes particular account of

• the costs arising for supervised institutions as a result of a regulation being enacted;
• the effects of regulation on competition, innovation capability and international competitiveness of Switzerland’s financial centre;
• the different business activities and risks of supervised institutions;
• and international minimum standards.

Regulatory process

FINMA provides for a transparent regulatory process and the appropriate participation of affected and interested parties. In preliminary consultations, it consults with them at an early stage on regulatory projects. FINMA consults the federal administrative bodies concerned before issuing or amending an ordinance or circular and before recognising self-regulation as a minimum standard pursuant to Article 7 para. 3 FINMASA. After being approved by the Board of Directors, FINMA’s ordinances and circulars are presented during a public hearing. Details of this are provided in Article 5 ff. of the Ordinance to FINMASA and in the Guidelines on Financial Market Regulation.

FINMA provides information about ongoing and completed hearings on FINMA ordinances and circulars. In particular, it publishes the comments received during the hearing and informs the public about the results of the hearing in a report.

In accordance with its communication policy, FINMA’s supervisory communication (guidance, FAQs on supervisory matters and guidelines) is restrained and FINMA carries out rigorous checks to ensure that it does not contain regulatory elements.

Planning and implementation

FINMA provides information about planned and pending regulatory projects and their status. It plans the implementation of regulations in a timely manner and defines appropriate transitional periods where necessary.

FINMA regulations are generally triggered by amendments to overarching legislation (laws and Federal Council ordinances) and are dependent on their timing and implementation. The FDF or the SIF provides information about regulatory projects at federal level.