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Self-regulation

There is a long tradition of self-regulation in the areas for which FINMA is responsible. Self-regulation performs an important task for the financial centre and takes on a variety of forms. A distinction is made between:

  • voluntary (or autonomous) self-regulation,
  • self-regulation that is recognised as a minimum standard, and
  • compulsory self-regulation based on a mandate from the legislature.

Voluntary (or autonomous) self-regulation is based solely on private autonomy and is established, by definition, without the involvement of the state. Self-regulation of this kind includes, for example, codes of conduct issued by professional associations. Under Article 7 para. 3 of the Financial Market Supervision Act FINMA is entitled, either at the request of a self-regulatory organisation or on its own initiative, to recognise self-regulatory measures as a minimum standard (cf. FINMA Circular 08/10 "Self-Regulation as a Minimum Standard"). Once recognised, such norms no longer apply merely to members of the relevant self-regulatory organisation but must henceforth be observed as a minimum standard by all other participants in the sector. Compliance with recognised minimum standards is enforced either by FINMA or the self-regulatory organisations. A list of currently recognised instances of self-regulation is included in the annex to FINMA Circular 08/10 "Self-Regulation as a Minimum Standard".

Compulsory self-regulation is based on self-regulatory organisations being instructed by the legislature to deal with a given topic through self-regulation. Regulatory mandates of this kind are contained, for example, in Article 37h of the Banking Act (deposit insurance), Article 4 para. 1 of the Stock Exchange Act (appropriate organisation), Article 4 para. 3 of the Collective Investment Schemes Ordinance (requirements for simplified documentation on structured products) and Article 25 of the Anti-Money Laundering Act (specification of due diligence obligations). Compulsory self-regulation can also be recognised by FINMA where the legislature has not already stipulated that statutory approval is required. Recognition enhances the legitimacy, effectiveness and credibility of such norms and helps ensure that self-regulation is perceived as an equivalent to statutory regulation both in Switzerland and abroad.

FINMA encourages self-regulatory organisations to take certain regulatory principles into account when drawing up new rules, particularly if they are seeking to have them recognised. The "Guidelines for financial market regulation" (available in German, French and Italian), dated July 2013, provide valuable input in this regard. In particular, self-regulatory standards should be transparent and easily accessible, and those affected by the regulation should have a say in its development. Proactive information exchange and coordination with all relevant authorities are also essential.

More on this topic (excluding insurance): Swiss Federal Banking Commission report "Self-regulation in the financial sector" (report in German with summary in English) dated July 2007.