The Swiss Financial Market Supervisory Authority has added to its guidelines, having consulted interested parties in the federal government, academia and the financial sector. The guidelines attempt to describe the general regulatory process in line with the new Ordinance to the Financial Market Supervision Act (FINMASA).

With these guidelines, FINMA is fulfilling its legal mandate to specify the regulatory principles specified in Art 7 Financial Market Authority Act (FINMAG) and its accompanying ordinance.

Regulatory principles

FINMA only regulates if this is necessary for the purposes of its supervisory objectives. If the legislator expressly provides for FINMA to issue technical implementing provisions by way of its own regulations, it will do so. It sets out its own supervisory practice in circulars and can also recognize self-regulation as a minimum standard.

In accordance with Art 7 FINMASA, FINMA only regulates to the extent that this is necessary with a view to the supervisory objectives and, whenever possible, bases its approach on principles. Proportionality is a prerequisite for its risk-based supervisory approach. It believes that its regulations should be as neutral as possible on the subject of competition and technology. Another policy is the early involvement of anyone who is affected by its intervention. This includes providers of financial services and products, customers of such providers, other market participants, potential competitors, as well as interested parties such as authorities and science.

Regulatory processes

In co-ordination with the Federal Department of Finance (FDF) and the Swiss National Bank (SNB), FINMA monitors the macroeconomic environment. Its regulations, its says, "are usually triggered by adjustments to superordinate law that have to be followed at a subordinate level." It is honour bound to clarify the various options for achieving this-or-that set regulatory target and the time-frame. It examines the existing legal scope for action in superordinate law and alternative measures such as individual decisions or recognised self-regulation. When designing regulations, it gauges the effects on the costs of those affected, competition, the ability to innovate, the international competitiveness and future viability of the Swiss financial centre, the different sizes, complexities, structures, business activities and risks of the supervised entities in question and the international standards to be considered.

FINMA generally estimates the costs of individual options for action early on and weighs them up against the expected benefits. In doing so, it takes regulatory impact assessments into account. The greater the importance of a regulatory project for the economy and for society, and the less certain its effects are, the more likely it is that FINMA will insist on extensive data collection.

FINMA involves the FDF and sometimes the SNB in ??its regulatory considerations and work. If FINMA comes to the conclusion that regulation at the level of the law or a regulation of the Federal Council is necessary to achieve something, it will inform the EVS.

The regulator generally conducts preliminary consultations with affected people and entities and interested parties. In doing so, it clarifies the relevant facts or collects the necessary information, explains the directions of the regulatory project and receives assessments. The need for action and possible options for action can also be the subject of the exchange. Preliminary consultations can take place between the parties concerned.

Before FINMA issues a regulation or circular and before it recognises self-regulation as a minimum standard in accordance with Article 7 paragraph 3 FINMASA, it conducts a consultation of the administrative units that are interested. It generally consults the public about draft regulations, taking care to give affected entities and interested parties the opportunity to express themselves. There is some Swiss law on the subject of consultations, which the regulator follows. Hearings take place in accordance with the provisions of the Ordinance on the Financial Market Supervision Act. In addition to its regulatory texts, FINMA publishes explanatory reports in which it presents the results of impact analyses. In exceptional cases, it dispenses with the need for a hearing if no new findings are to be expected, especially because there is no scope for action due to superordinate law.

FINMA aims to be consistency in content and timing with existing and other planned regulations, including self-regulation. Before adopting a regulation, it examines the arguments put forward at the hearing.