To distribute their funds in Switzerland to retail and institutional investors, managers must fulfill three main requirements:
- Appoint a Swiss representative authorized by FINMA and conclude a representation agreement;
- Appoint a Swiss paying agent and conclude a paying agent agreement; and
- For the funds, obtain FINMA authorization for distribution.
Eligible for public distribution in Switzerland are funds that are recognized in Hong Kong, i.e. they are established, domiciled and managed in Hong Kong in accordance with Hong Kong laws and regulations.
In view of the differences between the two regulatory regimes, a set of additional requirements have been established: A. Hong Kong funds must not:
- Invest in real estate, precious metals, precious metal certificates, commodity or commodity certificates;
- Short-sell securities, derivative financial instruments, units in collective investment and money market instruments; and
- Exceed a maximum borrowing limit of 10% of their total net asset value.
- in the case of funds of funds (FoF), the target fund in which the FoF invests must restrict investments in other funds to a maximum of 10%;
- the obligation to appoint a custodian qualified under Hong Kong’s Banking Ordinance;
- the fund designation (i.e., its name) must not provide grounds for confusion and deception.
Recognized Hong Kong funds must first contact a Swiss representative, which will explain the regulatory panorama, guide the fund manager through the approval process, inform about the documents to provide and Swiss legal wording to add, negotiate a representation agreement with the fund manager and assist in the choice of paying agent and with the paying agency agreement. The representative will submit the authorization to FINMA and manage the process. Retail fund distribution in Switzerland: an attractive market
With more than 4,000 ultra-high-net-worth individuals and the presence of sizeable amounts of capital from all categories of investors (including pension funds, insurance companies, banks, foundations, endowments and family offices) Switzerland is a large and attractive market for funds, and foreign managers’ funds account for the bulk of it.
We at Oligo provide a one-stop shop solution to foreign fund managers seeking to comply with the regulatory requirements outlined above. In addition, we help our clients to build relationships with investors and fund platforms in Switzerland by:
- organizing cap intro events and conferences to help fund managers meet investors;
- managing the accounting and payment of retrocessions to intermediaries, platforms and banks in Switzerland;
- publishing fund information on our electronic platform (Oligoworld) dedicated to Swiss investors;
- acting as a point of contact between fund managers and potential investors; and
- assisting managers with the registration of funds in selected other countries.
The Mutual Recognition of Funds agreement (MRF) between FINMA and SFC facilitates the process of registering eligible Hong Kong funds for distribution to retail and institutional investors in Switzerland. We at Oligo Swiss Fund Services provide regulatory cover and help our fund manager clients identify and access likely investor groups. Matteo Risoldi is chief operating officer and Joana De Burgo is an analyst at Oligo Swiss Fund Services. For questions on fund representation and distribution in Switzerland or neighbouring countries, contact Luis Pedro at [email protected] or +41 21 311 17 77. 2017 funds global asia