Issuance And Distribution Of Structured Products – New Rules For Switzerland

Author:Dr. Ansgar Schott and Catrina Luchsinger Gähwiler
Profession:Froriep Renggli
 
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Structured products - such as reverse convertibles, certificates and leverage products - are, to a certain extent, governed by the Act on Collective Investment Schemes ("CISA") and the Federal Ordinance on Collective Investment Schemes ("CISO"). Both, the CISA and the CISO have recently been amended and will, in their revised version, enter into force on 1 March 2013. Although no authorisation is required, the structured products must meet certain requirements for the distribution in Switzerland. 1. What is new under the revised CISA? The main changes concern the following three aspects: under the existing legal regime, the offering of structured products is only governed by the CISA, if the structured products are "publicly offered" in or from Switzerland. An offering is considered to be "public" if the structured products are offered to non-qualified investors (so-called qualitative safe harbour rule) and/ or a small group of investors (so-called quantitative safe harbour rule). under the new rules, the concept of public offering has been replaced by the following concept: An offering of structured products is only governed by the CISA if it constitutes a distribution of structured products to nonqualified investors. "Distribution" is a defined term (see 3. below). Further, the definition of "qualified investors" has become more restrictive (see 4. below). Also, it is uncertain whether the quantitative safe harbour rule, which related to the public element, still applies under the new legal regime. under the existing legal regime, structured pro- ducts may only be publicly offered in or from Switzerland if they are issued, guaranteed or distributed by either (i) a Swiss bank, insurance company or securities dealer or (ii) a foreign institution that is subject to equivalent standards of supervision, provided that it has a branch in Switzerland or the structured products are listed on a Swiss stock exchange, which ensures the same transparency as a simplified prospectus pursuant to the CISA (such as the SIX Swiss Exchange) (each a "Recognized Issuer"). pursuant to the revised CISA, the distribution by a Recognized Issuer will be no door-opener to the offering of structured products in or from Switzerland anymore: Structured products may only be distributed to non-qualified investors in or from Switzerland if they are issued, guaranteed or secured in a similar manner by a Recognized Issuer. subject to certain exceptions, under the existing and new...

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