This Citywire Switzerland article is written by Therese Grunder, head of listing at SIX Swiss Exchange. It originally appeared in the October 2017 issue of the magazine.
The new Swiss Financial Services Act (FinSA), currently being debated by parliament, is now firmly on the horizon.
It is expected to come into force by the beginning of 2019, and will introduce revised rules regarding the prospectuses that are published when securities are offered to the public or admitted to trading.
Significantly, it will bring Swiss regulations in line with EU law in many ways.
The state of play
Currently, there are separate regulations governing offering prospectuses – to be published when securities are offered to the public – and listing prospectuses, for when securities are listed on an exchange.
The Swiss Code of Obligations regulates the former, but establishes no obligation to have such a prospectus reviewed and approved by a state authority or private law body.
The listing prospectus, however, is vetted by the stock exchange in line with the Listing Rules, as enacted by the exchange’s regulatory body under its self-regulatory powers.
The fees levied when securities are listed cover the costs of processing the application and reviewing the prospectus, and are based on the SIX Swiss Exchange list of charges.
However, that is all set to change. FinSA will regulate both the offering and listing prospectuses, and will require them to be approved by a prospectus vetting body before they are published. This will undoubtedly entail changes to the listing process for the SIX Swiss Exchange as well as for other exchanges operating in Switzerland.
Under FinSA, the prospectus vetting process will be governed by public law. However, unlike in EU member states, the law will still allow the private sector to assume the function of the vetting body. SIX Exchange Regulation intends to apply for approval as such a body from the Swiss Financial Market Supervisory Authority (Finma).
Once the new law is in force, the stock exchange’s regulatory body will no longer be responsible for regulating the content of prospectuses. Instead, FinSA will detail prospectus schemes, setting out what information will be required. It is expected that the future prospectus schemes will be based on the current SIX Swiss Exchange schemes, and will therefore not differ too much from what issuers and advisors are already accustomed to.
FinSA will also contain some exemptions from the obligation to publish a prospectus when securities are listed. By and large, they will be the same as currently stipulated by the Listing Rules.
A more important change lies in the introduction of ‘passporting’ for prospectuses that have already been approved according to the laws of certain states.
The power to define which laws will be applied is set to be granted to the prospectus vetting body, but FinSA will also establish that prospectuses approved by the competent authority of an EU member state or the US will benefit from passporting.
The ability to make use of a prospectus that has already been approved under a recognised legal order elsewhere, without having to resubmit it for fresh approval, will certainly shake up the international offering of securities.
There is one final point to consider too: FinSA stipulates that the prospectus vetting body should levy fees to cover its costs.
Unfortunately, exactly how this will affect the cost in comparison with today is hard to estimate. It will largely depend on the final wording of FinSA, as well as what shape the prospectus vetting body ultimately takes.