Against the backdrop of dynamic developments in the financial markets, together with the ever-increasing complexity of the job of financial market supervision, the institutional structures of the supervisory organs which have been in existence up to now will also be improved. With the establishment of the integrated supervisory authority, a response has been made to changes together with a shift being made in organisational direction which will boost financial market supervision in Switzerland and considerably strengthen its position internationally.

FINMA will be established as an institution under public law, which has functional, institutional and financial independence and a modern management structure with a governing board, executive management and an auditing body. FINMA's independence on the other hand, calls for accountability and political supervision by the Confederation. FINMA personnel will be employed under private law. This ties in with the regulations which have also been agreed for the Audit Supervision Authority which has yet to come into existence.

Along with organisational issues, the recommended Financial Market Supervision Act (FINMA Act) also contains principles on financial market regulation, rules on liability as well as harmonised supervisory instruments and sanctions. The FINMA Act effectively has the function of an umbrella law for the other laws covering financial market supervision.

However, the legally-defined task of the supervisory authority remains the same and the particularities of the different supervisory sectors have been taken into account. Thus the banks still have to fulfil the requirements of the Banking Act, insurance companies have to fulfil those of the Insurance Supervision Act, the investment funds those of the Investment Fund Act, etc. Even the system of self-regulation in accordance with the Money Laundering Act and the Stock Exchange Act will be retained.

With the new organisation, the sanctions instruments should also be improved because in the past it proved to be not differentiated and effective enough. The current draft makes provision for a new, streamlined and harmonised sanctions ordinance comprising both revisions to the existing criminal law provisions and new administrative sanctions (e.g. confiscation or occupational ban).

In the case of financial market supervision, the Federal Council is, for the first time, recommending limitation of liability. This follows an international trend. FINMA should only be liable if it violates significant official duties and that damage cannot be attributed to misconduct of the supervised party.

Furthermore, modifications will be made to the official organisation of matters concerning takeovers. This is needed because of the revisions to the federal administration of justice. The changes will result in a four-tier structure of the judiciary responsible for takeovers. A protracted structure of this nature would virtually block takeover transactions and possibly cause them to collapse. Through a revision of the competencies held by the different authorities, this shortcoming will be remedied.

Address for enquiries:

Barbara Schaerer, Federal Department of Finance (FDF), tel. 031 322 60 18

Editor:

Federal Department of Finance

http://www.efd.admin.ch