Hedge Funds in Switzerland
Hedge Funds in SwitzerlandUpdated on Monday 21st September 2015
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Legislation for hedge funds in Switzerland
Hedge funds fall under the regulations of the Swiss Federal Ordinance on Collective Investment Schemes (Collective Investment Schemes Ordinance, CISO) and the FINMA (Financial Market Supervisory Authority). The supervisory authority for hedge funds in Switzerland is the Financial Market Supervisory Authority. Hedge funds have the same form as open-ended retail funds and can be constituted as contractual funds (fonds commun de placement, FCP) and Swiss investment companies with variable capital (SICAV).
The management of hedge funds in Switzerland
Companies with an appropriate organizational structure according to the Swiss Banking Act may act as custodian banks to hedge funds. The fund management company is another way of managing hedge funds in Switzerland. The fund management company must be organized as Swiss public limited company with a registered office in the country. The investment company with variable capital falls under the regulations of the Swiss Code of Obligations. The Code of Obligations also applies to limited partnerships constituted as hedge funds. The managers of Swiss hedge funds also can be:
- - legal persons constituted or Swiss limited liability companies,
- - general and limited partnerships,
- - branches of foreign asset management companies in Switzerland, provided that certain conditions are satisfied.
What can a Swiss hedge fund invest in?
The investment alternatives for hedge funds in Switzerland are:
- - securities,
- - financial market instruments,
- - collective investment schemes,
- - precious metals,
- - derivatives such as commodities, interest rates and indices,
- - structured financial instruments.
The Financial Supervisory Authority may also allow other investments, if the Swiss hedge fund’s regulation mentions so. For details about all investment alternatives you can ask our lawyers in Switzerland.
New regulations regarding hedge funds in Switzerland
The Federal Act on Collective Investment Schemes (CISA) was amended in 2013 in order to correspond with the European Alternative Investment Funds Managers Directive (AIFMD) thus imposing all foreign asset managers of Swiss hedge funds and other types of collective investment schemes more cautious licensing and supervising procedures. Another regulation was enacted in 2014 and it targeted pension funds. According to the new regulation, only providers that have been licensed by the Swiss Financial Supervisory Authority will be allowed to manage pension schemes.
You can contact our law firm in Switzerland for information on how to set up a hedge fund.