Swiss Federal Council plans to launch a new fund category for qualified investors to make Switzerland more attractive as a fund domicile.
19 August 2020 | AtoZ Markets – The Federal Council is the highest executive body of the Swiss Confederation. The Federal Council serves as the collective body of Swiss states and governments. Moreover, it is an executive council consisting of seven members who represent major Swiss political parties. They usually hold a meeting once a week.
Today, the Swiss Federal Council adopted amendments to the Collective Investment Scheme Act (CISA), aiming to create a new fund category, the so-called Limited Qualified Investor Fund (L-QIF). New fund category exclusively reserved for qualified investors such as financial intermediaries and pension funds, not covered by the Financial Market Authority or FINMA’s license or approval. However, an institution under the supervision of the Swiss FINMA will have to manage it. This aims to strengthen Switzerland’s competitiveness as a fund center. Federal Council stated:
The provisions of the Collective Investment Schemes Act also apply in principle to L-QIFs, which must additionally be audited. However, L-QIFs are subject to specific investment rules. These rules couch in very broad terms, given the goal of promoting innovation and owing to the limited investor group. The fact that the L-QIF is available only to qualified investors also considers investor protection.
Fund promoters and investors may appreciate the reputation of having ties to the Swiss financial markets and their regulators. Due to the lack of more flexible investment vehicles, they may end up choosing its neighboring countries as a more suitable fund domicile. With the proposed L-QIF, Switzerland is joining the ranks of investment vehicles to become more competitive.
The new fund category aims to provide a Swiss alternative to similar foreign products and enable more collective investment schemes to introduce in Switzerland in the future. The bill will be discussed in parliament in late 2020. The bill is expected to enter into force in 2022.
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