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  • Draft ordinance FINIO-FINMA: what's the impact for financial institutions?

Draft ordinance FINIO-FINMA: what's the impact for financial institutions?

28 April 2020

The draft of the new FINMA Financial Institutions Ordinance (FINIO-FINMA) for consultation was publicly released on 7 February 2020 until 9 April 2020. The adoption is planned for the fourth quarter 2020. The aim is to complement and give further details to the provisions of the law (FINIA) and the ordinance on the financial institutions (FINIO).

The project of the new FINMA ordinance contains only 26 articles. Unsurprisingly, most of them are taken from the actual CISO-FINMA with just a few amendments and some mandatory wording changes.

In a nutshell, the draft ordinance mainly regulates:

  1. the details of the professional indemnity insurance for portfolio managers, trustees as well as managers of collective assets with few substantial changes compared to the current situation;
  2. the details of calculation of the de minimis threshold for managers of collective assets, which are merely transferred from the actual CISO-FINMA 
  3. the risk management framework for managers of collective assets and management companies with few changes compared to the actual regulations.

Professional indemnity insurance for Portoflio Managers, Trustees and Managers of collective assets

The requirements are mainly based on the preexisting framework that applies for professional indemnity insurance of former CISA asset managers with some substantial amendments.

Professional insurance for Portfolio Managers & Trustees

The insurance coverage will be extended to a minimum of 5 years for policies with the claims-based principle or occurrence of damage principle.

It is also clarified that the scope of the insurance cover must include the geographical area and defined business area in the relevant organizational documentation.

Unlike the current situation, the insurance will cover anypecuniary losses that arise from all activities with the inclusion of gross negligence.

In case of change or termination of the insurance, the company needs to notify the FINMA.

In addition, in order to comply with the capital requirements, portfolio managers and trustees may use 70% of the annual cover amount to meet half of their own funds requirements. This provision is not applicable for managers of collective assets.

Professional insurance for Managers of collective assets

For managers of collective assets, the requirements are similar to the ones applicable for asset managers & trustees, however the insurance cannot be used to cover a significant part of the own funds.

In addition, new requirements are set for the insurance minimum coverage that differ from the existing ones. In particular, the insurance coverage for an individual claim increases from the actual 0,7% to 2% of the total assets of funds managed and the one for all claims in a year from 0,9% to 3% of the total assets of the funds managed. This will probably affect the price of the insurance.

Minimum threshold for Managers of collective assets

The de minimis threshold provisions in the CISO-FINMA are entirely transferred to the FINIO-FINMA. As the term “managers of collective assets” now also includes managers of occupational pension schemes, a new provision is required to include specific principles for the evaluation of pension assets.

Risk Management for Managers of collective assets and Management companies

The provisions dedicated to the risk management are also applicable to management companies. In particular, the articles dedicated to the risk management in the CISO-FINMA are transferred to the new FINIO-FINMA with some additional requirements, mainly related to liquidity.

The draft clarifies that in order to assess the risk appetite, the BoD needs to consider the risk tolerance of the institution.

Moreover and in accordance with the FINMA's main points of attention as disclosed in its last annual activity reports, the draft ordinance formally introduces the concept that the institutions must evaluate and document – on a regular basis – the liquidity risk and other key risks at the level of each fund managed. It is possible to renounce the requirements of this provision if the NAV of the fund does not exceed 25 MCHF.

Furthermore, the institutions will need to define appropriate internal liquidity thresholds for each fund that they managed.

For managers of occupational pension schemes, the risk assessment needs to include the risk of every pension fund managed and their cumulative risk.

Transitional provisions

According to the transitional provisions, asset managers of collective assets and management companies that are already authorized will need to comply with the new ordinance within 1 year after its entry into force.

Amendments of CISO-FINMA and FINMA circulars

Further to the transfer of the provisions related to managers of collective assets and management companies to the FINIO-FINMA ordinance, several adjustments to the CISO-FINMA will be required. The CISO-FINMA will then only be applicable for funds, SICAV, representatives of foreign funds and depositary banks.

In addition, further to the entry into force of the FINSA and FINIA law, the circular FINMA Distribution 13/09 will be abolished; the FINMA Circular 13/08 will be amended and extended to Asset Managers & Trustees.

The FINMA Circular Outsourcing 18/03 is currently mainly for banks, insurance and securities dealers and will be extended to all FINIA institutions with some clarifications provided for asset managers and management companies.


In conclusion, the draft ordinance does not change significantly the current framework; it reorganizes some provisions contained previously in the CISO-FINMA to reflect the new architecture of the law and new terminologies. It clarifies the insurance conditions for the new entries in the regulated market (trustees and portfolio managers). For asset managers of collective schemes, the new requirements on the indemnity insurance coverage will probably result in additional costs. Finally, the new risk management provisions on liquidity will require adapting the risk assessment and procedures of some institutions.