Principle-based regulation
SFMA is committed to principle-based, differentiated, technology-neutral and internationally compatible regulation, which allows the authority to perform its supervisory function to protect creditors, investors, policyholders and the financial system effectively.
- Financial Market Supervision Act, SFMA Act
- Ordinance to the Financial Market Supervision Act
- SFMA Guidelines on Financial Market Regulation
Besides its primary function as a supervisory body that monitors compliance with financial market legislation, SFMA also has regulatory powers. The guiding principles for SFMA’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).
SFMA ordinances and circulars
In accordance with Article 7 of the Financial Market Supervision Act (SFMA Act), SFMA may regulate through ordinances and circulars. SFMA 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 SFMA’s regulatory competence in a given case. SFMA’s ordinances serve to spell out technical details and are of secondary importance (cf. Article 5 para. 1 Ordinance to SFMA Act). SFMA uses circulars to describe how it interprets financial market law. Circulars do not as a result 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 SFMA, however, so creating legal certainty for supervised entities (cf. Article 5 para. 2 Ordinance to SFMA Act). The current SFMA ordinances (as well as any previous versions) can be found in the Classified Compilation of Federal Legislation (SR). SFMA’s current circulars can be accessed on this website. Any previous versions will be filed in the archive.
Principles of regulation
SFMA 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 SFMA Act, when enacting regulations SFMA 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
SFMA 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. SFMA 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 SFMA Act. After being approved by the Board of Directors, SFMA’s ordinances and circulars are presented during a public hearing. Details of this are provided in Article 5 ff. of the Ordinance to SFMA Act and in the Guidelines on Financial Market Regulation. SFMA provides information about ongoing and completed hearings on SFMA 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, SFMA’s supervisory communication (guidance, FAQs on supervisory matters and guidelines) is restrained and SFMA carries out rigorous checks to ensure that it does not contain regulatory elements.
Planning and implementation
SFMA 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 when required. SFMA 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.
SFMA’s role in regulation
The related information for this topic is set out in the following section.
What SFMA does
- SFMA may enact its own ordinances, where it is authorised to do so.
- SFMA may issue circulars setting out its own supervisory practices and clarifying them for all market participants.
- SFMA is tasked with recognising self-regulatory measures taken by industry organisations.
- SFMA provides its expertise to assist in preparing draft versions of laws and Federal Council ordinances.
- SFMA provides support to the parliamentary process, contributing the supervisory perspective and objectively pointing out the effects of regulatory projects.
What SFMA does not do
- SFMA does not set the legislative framework for its own supervisory activities.
- The enactment of legislation is the responsibility of Parliament, while the Federal Council is tasked with issuing ordinances.