Custodian banks of collective investment schemes
Custodian banks take on an important function in relation to collective investment schemes managed by fund management companies, SICAVs and SICAFs. Unlike depositories and paying agents, custodian banks must be authorised by FINMA.
Authorisation requirements
To be eligible for a licence from FINMA, a custodian bank must meet at least the following requirements (under Art. 72 CISA, Art. 102a CISO and Art. 53 FinIO):
it must be a bank in accordance with the Banking Act;
it must have an organisation that is appropriate to its role as a custodian bank of collective investment schemes;
the persons entrusted with the management and with the tasks of custodian bank must provide the guarantee of irreproachable business conduct;
the custodian bank’s staff must have the specialist qualifications required for their functions;
it must have at least three full-time equivalent positions with signatory powers for its activities as a custodian bank;
those responsible for managing the fund management company must be independent of those managing the custodian bank, and vice versa.
Role of a custodian bank
The role of a custodian bank includes holding fund assets on deposit, issuing and redeeming units, and handling payments processing. A custodian bank can delegate the safekeeping of fund assets to third-party or central securities depositories in Switzerland or abroad where this is appropriate. Investors must be informed in the fund prospectus and key information document of the risks associated with this kind of delegation (Art. 73 para. 2 CISA).
The custodian bank must also ensure that the fund management company or SICAV complies with the law and the fund regulations. It verifies that:
calculation of the net asset value and issue/redemption prices complies with the law and the fund regulations;
investment decisions comply with the law and the fund regulations;
profits are used in accordance with the fund regulations.
Changes in circumstances
Custodian banks must report to FINMA any changes in the facts on which their authorisation is based, particularly any personnel changes among those responsible for managing the custodian bank, the expansion of business activities and other changes to the custodian bank’s organisation. The report must be made immediately (Art. 16 CISA and Art. 15 para. 2 CISO).
Cessation of an activity for which authorisation is required
Any intention to cease the authorised activity requires prior approval from FINMA (Art. 16 CISA).
Information and templates
When applying for authorisation and making changes requiring authorisation, application templates are available on the EHP survey and application platform and the following documents can be used.
Applicants must self-register via the FINMA homepage to gain access to the EHP. Following self-registration and the review by FINMA, they will be able to access the EHP through the FINMA portal via two-factor identification.
