Cross-border financial serv - Lenz & Staehelin

Shelby R. du Pasquier / Philipp Fischer – Cross-border financial services in and from Switzerland GesKR 4 2010
between non-banking securities dealers and banks benefiting
from an additional license as a securities dealer 42 .
2.2 Exemption for cross-border activities
The SESTA provides for a liberal regime for cross-border
activities, which is closely modeled on the one applicable
to cross-border banking activities and thus hinges
upon a similar «physical presence» test 43 . The inbound
offering of securities dealer services is not regulated in
Switzerland 44 , except if the foreign securities dealer 45
maintains a branch or a representative office in Switzerland:
• A Swiss branch exists if individuals, located permanently
in Switzerland and acting in a professional
capacity, in or from Switzerland, either (A) trade in
securities for the foreign securities dealer, (B) maintain
client accounts or (C) have the authority to act
on behalf of the foreign securities dealer (Article 39
(1) (a) SESTO). In substance, the developments made
under Section II.1 above with respect to the Swiss
branch of a foreign bank apply mutatis mutandis to
the Swiss branch of a foreign securities dealer 46 .
42 SFBC Annual Report 1996, 62.
43 BSK BEHG-Huber, Art. 10 Abs. 1-4 N 21; Urs Roth in: Hertig/Meier-Schatz/U.
Roth/D. Roth/Zobl (Ed.), Kommentar zum
Bundesgesetz über die Börsen und den Effektenhandel, Zurich
2000, Art. 10 NN 61 and 63.
44 Some legal scholars query whether this liberal regime is actually
in line with the intent expressed by Swiss lawmakers when enacting
the SESTA. Indeed, Article 10 (4) SESTA provides that the
Swiss Federal Council (i.e., the Swiss government) is to establish
«criteria to regulate foreign securities dealer which are active in
Switzerland without maintaining a branch or a representative office
in this country.» (Roth (FN 43), Art. 10 N 63). A possible
answer to this is the fact that the Swiss government fulfilled its
mandate by regulating the remote members of Swiss exchanges
(Article 39 (1) (b) SESTO).
45 Under Article 38 SESTO, a «non-Swiss securities dealer» is defined
as an entity that either (A) benefits from a license to conduct
securities dealing activities in its home jurisdiction, (B) uses the
terms «securities dealer» (or a similar term, such as «(securities)
broker») in its corporate name, its corporate purpose or its corporate
documentation, or (C) conducts securities dealing within
the meaning of the five categories listed in Article 3 SESTO. It
is important to point out that the FINMA pays close attention
to the regulatory status of the non-Swiss entity in its home jurisdiction.
The Swiss branch or representative office of a non-Swiss
entity that benefits from a license, in its home jurisdiction, which
is comparable to a Swiss securities dealer license, would be subject
to regulation in Switzerland, even if the activities conducted in
Switzerland are not, as such, regulated in this country. For example,
the Swiss branch of a non-Swiss securities dealer would
be subject to a licence requirement in Switzerland even if the sole
purpose of such branch is to conduct asset management activities,
which are, as a general rule, not subject to a prudential supervision
in Switzerland (see Section II.5 below).
46 As regards the criterion of «independence» (see FN 18), the Swiss
Supreme Court, in its case law, has clearly indicated that this test
is not relevant when examining whether or not the physical presence
of a foreign securities dealer qualifies as a «branch» (Swiss
Supreme Court decision n° ATF 126 II 71 of November 19, 1999 in
the matter Comfinor et al., para. 5.a, a German translation of this
decision was published in SFBC-Bulletin 40 (2000), 94 et seq.). See
• If the requirements for a Swiss branch are not met,
it is still necessary to ascertain whether Swiss-based
individuals do not conduct other activities in Switzerland
in support of the main office, for instance by
passing on client orders or by marketing the services
of the non-Swiss securities dealer 47 . Should this be
the case, the Swiss presence would be characterized
as a representative office, which is also subject to a license
requirement (Article 39 (1) (a) (2) SESTO).
Again, as for banking entities, the setting up of a Swiss
branch or representative office must be distinguished
from the establishment of a Swiss subsidiary by the foreign
securities dealer. Such a distinct legal entity would
be subject to the prudential requirement applicable to
ordinary Swiss securities dealers and could not rely
on the cross-border exemption. In addition, the corollary
to the liberal cross-border exemption is again the
requirement that foreign securities dealers that are (A)
de facto managed from Switzerland or (B) exclusively
or predominantly active from Switzerland must adopt
a Swiss legal form (Article 38 (2) SESTO) 48 . Finally, the
FINMA, as the consolidated supervisor over the Swiss
financial markets, benefits from the same procedural
tools, as in the banking area, in order to stop unauthorized
activities in the securities dealing area 49 .
Three sets of rules that are specific to securities dealers
are worth mentioning here: (A) the concept of «introducing
brokers», (B) the concept of a «remote member» of a
Swiss exchange and (C) the territorial scope of the Swiss
rules of conduct.
Firstly, a particular regulatory regime applies to introducing
brokers, meaning individuals or entities acting as
an intermediary between a foreign securities dealer and
Swiss-based customers 50 . Prima facie, the promotional
activities of an introducing broker should fall within the
ambit of the definition of a representative office. That
being said, the FINMA makes a distinction depending
upon the intensity of the subordination existing
between the introducing broker and the foreign securities
dealer 51 . The Swiss regulator has taken the position
that Swiss introducing brokers are not regulated if (A)
the agreement entered into with the intermediary lacks
an exclusivity provision 52 and does not allow the intro-
also BSK BEHG-Huber, Art. 10 Abs. 1-4 N 24 and Rolf H. Weber,
Börsenrecht, Zurich 2001, Art. 10 N 7.
47 BSK BEHG-Huber, Art. 10 Abs. 1-4 N 28.
48 BSK BEHG-Huber, Art. 10 Abs. 1-4 N 21; Roth (FN 43), Art. 10
N 58.
49 Swiss Supreme Court decision n° ATF 126 II 71 (FN 46) para. 6.a);
Swiss Supreme Court decision n° 2A.65/2002 of May 22, 2002,
para. 5.3; BSK BEHG-Huber, Art. 10 Abs. 1-4 N 25.
50 BSK BEHG-Huber, Art. 10 Abs. 1-4 N 21; Roth (FN 43), Art. 2
lit. d N 48-50.
51 BSK BEHG-Huber, Art. 2 lit. d N 63.
52 The relevant exclusivity is that the introducing broker is the only
one acting as an intermediary for the relevant foreign securities
dealer (FINMA Circular 2008/5, para. 59).
441
Aufsätze