IMF Issues Detailed Assessment of Implementation on the IOSCO Objectives and Principles of Securities Regulation in Switzerland

The International Monetary Fund ("IMF") released a report outlining, in detail, the implementation of IOSCO Objectives and Principles regarding securities regulation in Switzerland.

According to the IMF, Switzerland made major improvements in order to supervise, enforce and comply with audit quality and independence requirements. Additionally, the report notes that Switzerland is preparing to introduce a new legislative framework to comply with the G-20 over-the-counter derivatives commitments.

The IMF report found that the Swiss Financial Market Supervisory Authority ("FINMA") enhanced its enforcement powers through new, specific prohibitions on insider trading and market manipulation. Specifically, the prohibitions enable FINMA to combine the "more narrowly defined" criminal market abuse provisions with the use of its administrative enforcement powers. The IMF noted, however, that a question remains as to whether the Swiss administrative and criminal authorities have an "appropriate range of sufficiently dissuasive sanctions at their disposal." The IMF recommended that authorities explore the possibility of introducing administrative fining power.

Furthermore, the IMF found that the Swiss authorities will still face "significant challenges" in coping with the upcoming securities regulatory overhaul. According to the IMF, the overhaul will involve increased regulation and oversight on "the issuance of unlisted securities, financial market infrastructures, independent asset managers, and conduct of business of banks and securities dealers." In light of these upcoming changes, the IMF recommended that authorities assess the impact of changes on the resources and organization of FINMA in anticipation of the overhaul.