Switzerland’s New Financial Market Architecture

Feb 28, 2022

Written by: Eveline Bieler, Head of Risk & Compliance, ELIA Investment Advisors Ltd.

The Swiss finance industry is going through interesting times. In addition to the changing economic environment and political views on how to govern financial market activities, the regulatory framework is about to be amended in a fundamental and comprehensive way. No longer will regulation have a sector focused approach. Rather, henceforth, the financial markets legal architecture will be based on different levels of regulation with the aim of applying the same rules to similar products and services across the industry.

In contrast to the existing pillar model, the new Swiss financial market architecture will, figuratively speaking again, work with both vertical pillars and horizontal beams. While certain vertical product- or sector-oriented regulations (such as the Collective Investment Schemes Act – CISA) will remain in place, areas suitable for a harmonised regulation across different sectors will be carved out and incorporated into the new horizontal financial market acts. The future architecture will comprise different levels of regulation (product level, institution level, infrastructure level, point of sale level, supervision level, etc.), which will, for example, facilitate subjecting certain financial service providers, such as client advisors, to point of sale duties.

The following four acts will constitute the core of this new horizontal regulation:

  1. The existing Financial Market Supervision Act (FINMAG):  Supervision

The FINMAG established the Swiss Financial Market Supervisory Authority (FINMA), a single, integrated supervisory authority across different sectors, to carry out the functions of the former SFBC (banking supervision), the Private Insurance Supervision Authority (insurance supervision) as well as the Anti-Money Laundering Control Authority (anti-money laundering supervision of financial intermediaries). 

  1. The new Federal Financial Services Act (FIDLEG):  products: Point of sale

The purpose of the new Financial Services Act (FIDLEG) is client protection and the creation of a sufficiently level playing field in terms of regulatory conditions for the rendering of financial services (Art. 1 para. 1 FIDLEG).  Key content of the new proposed law is the determination of requirements for the loyal, diligent, and transparent provision of financial services, and of rules on the enforcement of civil claims of clients of such financial service providers (Art. 1 para. 2 FIDLEG). In addition, the proposed FIDLEG regulates the organisation and approval of the client adviser register, the inspecting authority for prospectuses, and the ombudsman’s office (Art. 1 para. 3 lit. a–c FIDLEG). Its proposed scope comprises the regulation of financial services providers, client advisers, distributors, and producers of financial instruments (Art.  2 lit.  a–c FIDLEG) 26. 

  1. The new Financial Market Infrastructure Act (FINFRAG):  Infrastructure

The Swiss Financial Market Infrastructure Act, also known under the German denomination FinfraG (Finanzmarktinfrastrukturgesetz), came into force on 1 January 2016. It regulates the organisation and the operation of financial market infrastructures, for example, stock exchanges and central counterparties, the trading of derivatives, the conduct of business rules, for example, insider trading and market manipulations, shareholding disclosures and public takeovers offers.

The main rationale behind FinfraG is to align the Swiss regulatory framework with international standards, in particular with the EU regulations (MiFID II, MiFIR, EMIR and CSDR) with a view to preserving Switzerland’s global competitiveness.

  1. The new Financial Institutions Act (FINIG):  Institutions

The Financial Institutions (FinIA / FINIG) and Financial Services (FinSA / FIDLEG) acts are one of the proposed new pieces of legislation that have emerged as a result of the authorities’ endeavours towards achieving cross-sectoral regulation. The purpose of the FinSA/FinIA is to strengthen client protection on the Swiss financial market and to promote the competitiveness of the financial centre. Furthermore, a level playing field for the performance of financial services shall be introduced for all market participants and a coherent and appropriate supervision of the operation of the asset management business shall be established.

In a nutshell:

Under the new regulatory framework, the clients benefit of better governance, better investor protection, more cost transparency and institutionalisation of the investment management process.

ELIA Investment Advisors, as a regulated Asset Manager, has been at the forefront of these developments and has been working with PwC for the adaptation to the new regime, adhering to the highest standards and business practices for the benefit of its clients.

Eveline Bieler

Independent Advisor to the Board

Eveline is an Independent Advisor to the Board on multiple corporate topics. Eveline brings an extensive experience in supporting wealthy families in their banking and wealth management matters. Prior to joining ELIA Investment Advisors, Eveline had worked for 10 year at key client desks of UBS, Bank Morgan Stanley and Goldman Sachs in Zurich, and has also spent two years in Hong Kong as an Analyst for a Boutique Financial Advisory, Private Equity & Risk Management Firm. Eveline holds a specialist certificate in Asset Management from Hong Kong Securities and Investment Institute and has completed a Master’s Degree in Financial Consulting and the Certified Financial Planner (CFP®) programme at Zurich University of Applied Sciences.

James Bejjani

Senior Partner

James has over 17 years of experience in Portfolio Management and Special Situations in the United States, Europe and the GCC. His areas of expertise span across a range of asset classes including Private Equity and Venture Capital. Prior to joining ELIA Investment Advisors James Bejjani served as Director of a large Geneva based multifamily office, and member of its Investment Committee. Earlier, James had spent eight years at M1 Group, a Single Family Office, where he was a Portfolio Manager. In that role he led M1’s Fixed Income investment activities in public (credit and capital structure investing) and private companies in both Developed and Emerging markets. Before that, he worked at Macquarie Funds Group where he had dual responsibility as a Trader and Analyst for a multi-billion dollar Fixed Income portfolio for institutional clients. He was also previously an Associate Director and an Institutional Investor ranked Strategist at UBS Investment Bank in New York. He began his career on Wall Street at Mortgage Industry Advisory Corporation (as a Quantitative Analyst). 

James earned his MS in Financial Mathematics from Warwick Business School in the UK, his BA in Economics and minor in Mathematics from the American University of Beirut and his double LLB degree in Private and Public Law from Saint Joseph University. He also completed an executive program at the Wharton School of the University of Pennsylvania. In addition, James is a member of the NY based Fixed Income Analysts Society.

Anton Schmidt

Managing Partner

Anton has spent over a decade covering UHNW families and individuals. He dedicated his professional career to providing tailor-made and differentiated investment advice across major asset classes and whole range of financial instruments. Most recently as an Executive Director and Private Wealth Advisor in the Private Wealth Management division of Goldman Sachs in Zurich after joining from Morgan Stanley in 2012, where he started as an analyst in 2010. His prior professional experience includes Bloomberg in London and Volkswagen in Wolfsburg.

Anton holds a Business Administration Diploma (MSc) with specialisation in Banking & Finance from Mannheim University, Germany and a Postgraduate Certificate in Finance from London School of Business and Finance, UK.

Christos Kontos CFA, FRM

Founding Partner & CEO

Prior to setting up ELIA Investment Advisors, Christos worked as an Executive Director at the Wealth Management divisions of Goldman Sachs (2014 – 2019) and Morgan Stanley (2007 – 2014), offering an institutional approach to private client investing. Before entering the world of the two large Investment Banks, Christos served as a Senior Associate for Swiss Capital Alternative Investments (currently StepStone Global), a Hedge Fund company based in Zurich, dealing with the design of specialised investment solutions for pension funds and insurance companies. Prior to moving to Switzerland in 2005, he worked in the Fixed Income Derivatives department of Intesa San Paolo IMI in Milan, and Equity Trading at NBG Securities and Alpha Bank in Greece.

Christos is a holder of the Certificate of Business Excellence from Columbia Business School in New York and holds an MBA from SDA Bocconi in Milan, an MSc in Finance from Strathclyde University in Glasgow and a BSc from Athens University of Economics and Business. He is a certified risk manager (FRM) by the Global Association of Risk Professionals (GARP) and holds the Chartered Financial Analyst (CFA) designation.