<h3>Legal Classification of FINMA Circulars</h3>
FINMA is obliged to apply and enforce the laws and ordinances issued by the legislator. In accordance with article 7(1)(b) of the Federal Act on the Swiss Financial Market Supervisory Authority, FINMA regulates the application of financial market legislation by means of circulars, among other things. FINMA circulars merely serve to create transparency regarding FINMA&#8217;s supervisory practice and to clarify questions of interpretation; they are not of a legislative nature and must not introduce any obligations that deviate from or go beyond the law or ordinance (article 5(2) of the Ordinance to the Financial Market Supervision Act).
<h3>Key Points of the FINMA Circular</h3>
The circular &#8220;Duties of conduct under FinSA/FinSO&#8221; contains several key points, some of which were amended during the consultation process:
<ul>
<li>Services excluded (or covered) by the FinSA: According to article 3(3)(b) of the Ordinance on Financial Services (FinSO), the placement of financial instruments with or without a firm underwriting commitment and related services are not considered financial services within the meaning of article 3(c) of the Federal Act on Financial Services (FinSA). The explanatory notes to the FinSO of November 6, 2019 of the Federal Department of Finance FDF already stated that the FinSA serves to protect investors, i.e. in this context it is aimed at the offering of financial instruments to investors, but not at the relationship of the service provider with companies and their shareholders as partners who finance themselves via the capital market. The FINMA-Circular 2025/2 takes up this wording. FINMA&#8217;s explanatory notes to the circular provide further clarity: neither the financial services providers nor the company seeking financing are to be regarded as particularly worthy of protection in relation to an investment activity. The FinSA serves to protect investors and not issuers. However, if the service relates directly to the relationship between the financial service provider and its clients in their capacity as investors and thus &#8220;clients&#8221; within the meaning of article 3(c) FinSA, the placement of financial instruments may constitute a financial service. 
In our understanding, this corresponds to the situation as held by the majority of literature and existing practice to date. Members of a syndicate or banks, securities firms or pure intermediaries (reine Vermittler) acting exclusively for the issuers or e.g. selling founders, who do not perform this activity for their clients acting as investors on the buy side, are not subject to FinSA. As the literature focuses here on the de facto appearance and bona fide understanding of the buyers, organizational or other measures (e.g. disclaimers or clarifications) must be taken/reviewed to ensure that this role is also recognizable as such.</li>
<li>Duty to provide information: The FINMA-Circular 2025/2 also contains FINMA practice and requirements for fulfilling the duty to provide information under FinSA.
<ul>
<li>Compared to the draft circular, however, the requirements for the form of the information have been simplified. Information on the form of the information is now dispensed with and reference is made instead to existing statutory provisions (article 9(3) FinSA in conjunction with article 12 FinSO).</li>
<li>The circular provides for various information obligations regarding risk disclosure on contracts for difference (CFDs). In contrast to the draft, the final circular adds quarterly information for private clients who have suffered a total loss of margin on CFDs in the last 12 months. This is intended to increase transparency and enable clients to better understand the risks.</li>
<li>The final circular provides for a requirement to inform about the nature and extent of concentration risks insofar as risk concentrations in client portfolios that are not customary in the market are not excluded in asset management and portfolio-related investment advice and specifies customary types of such information.</li>
</ul>
</li>
<li>Requirements regarding the appropriateness and suitability test: Financial service providers create risk profiles of their clients by obtaining information for the appropriateness and suitability test. According to the FINMA-Circular 2025/2, all information required for the appropriate performance of the appropriateness and suitability test must be obtained. Financial service providers must check the knowledge and experience of clients for each relevant investment category. In the case of asset management and portfolio-related investment advice, they also must take into account the investment strategy and financial instruments used. The required level of detail of the inquiries depends on the complexity and risk profile of the investments and the investment strategies.</li>
<li>Securities lending: The FINMA-Circular 2025/2 also specifies the minimum information required and to be documented when using clients&#8217; financial instruments (securities lending). This includes whether the financial service provider acts as a counterparty (principal) or as an agent, that the ownership of financial instruments is transferred to the counterparty and that there is only a claim to the same type and quantity being repurchased, that in the event of bankruptcy of the counterparty, there is only a non-privileged monetary claim, etc.</li>
<li>Client information when considering own financial instruments: Financial service providers inform customers whether the market offering considered by the financial services provider in the selection of financial instruments includes only their own, both their own and third-party, or only third-party financial instruments. When considering its own financial instruments, the financial services provider must avoid creating specific incentives in the remuneration of the persons involved in the rendering of the financial services and the customers must be informed about unavoidable conflicts of interest resulting from considering its own financial instruments.</li>
<li>Compensation from third-parties / retrocessions: FINMA specifies its expectations regarding the form and content of client information on third-party compensation / retrocessions that the financial services provider receives and retains with the consent of its customer.</li>
</ul>
The information about retrocessions in the financial services provider&#8217;s standard contracts must be visually highlighted and must be physically available to the customer or easily accessible electronically.
In respect of the content of the information to be disclosed, the ranges of third-party compensations of the different classes of financial instruments as well as the ranges of third-party compensation based on the portfolio value and the applied investment strategy have to be provided in case of an asset management relationship. According to the FINMA, the same disclosure standard applies in case of portfolio-related investment advice. As the investment decision is with the customer when providing only investment advice, the financial services provider will need to determine the ranges of third-party compensation based on the recommended investment strategy and irrespective of whether the customer follows the recommended investment strategy in order to meet the FINMA&#8217;s expectation expressed in the circular.
The financial service providers disclose the actual amounts received to the customers upon request, generally free of charge. Exceptionally, in the case of extraordinary effort, such as multiple exercises of the right to information within a year, a moderate, at most cost-covering flat fee may be charged.
Compared to the consultation draft, not only have individual points in the FINMA-Circular 2025/2 itself been adjusted, but also various explanations. It is advisable to read these explanations carefully in order to better understand the nuances of FINMA&#8217;s statements in the circular. In our opinion, this applies in particular with regard to the delimitations concerning article 3(3)(b) FinSO and to better understand the differences between asset management, portfolio-related investment advice and transaction-related investment advice in the FINMA-Circular 2025/2.
<h3>Need for Action</h3>
Despite the amendments to the final circular, there is still a need for action in certain areas. In particular:
<ul>
<li>Article 3(3)(b) FinSO: For service providers who are not subject to FinSA (and do not intend to be), an analysis of their own activities and practice is recommended. Service providers must be sure for whom they are acting and how and/or whether the necessary clear (organizational, etc.) separation exists. The bona fide impression must also be critically scrutinized and, if necessary, it must be ensured through training, disclaimers and other measures that the services are not subject to FinSA.</li>
<li>Information on retrocessions: In order to retain third-party compensation, financial service providers must make customers aware of the third-party compensation expected to be received by the financial services provider. FINMA expects from the financial services provider that such information in standard contracts is highlighted visually or, alternatively, disclosed in a separate letter or form. This information must be physically presented to customers or easily accessible electronically. A general reference to the financial service provider&#8217;s website is not considered sufficient.</li>
</ul>
As FINMA expects the same disclosure for portfolio-related investment advice as for portfolio management, the financial services provider will need to determine and disclose the ranges of third-party compensation based on the recommended investment strategy for the portfolio.
The new FINMA circular &#8220;Duties of conduct under FinSA/FinSO&#8221; comes into force on January 1, 2025 and is intended to increase transparency and legal certainty in the financial services sector. It remains to be seen how financial service providers will implement the new requirements and what further adjustments will be necessary in practice.

Homburger Bulletin

FINMA Circular "Duties of Conduct Under FinSA/FinSO"

On July 26, 2024, FINMA published <a href="https://www.finma.ch/en/news/2024/07/20240726-m-am-06-24-stablecoins/">Guidance 06/2024</a> «Stablecoins: risks and challenges for issuers of stablecoins and banks providing guarantees» (Guidance 06/2024). Whilst the «Guidances» (Aufsichtsmitteilungen) published by FINMA are not of a normative nature and therefore may not stipulate additional requirements on financial institutions going beyond the existing legislation, FINMA utilizes Guidances to publish its supervisory practice and interpretation of the Swiss financial market laws.
<h3>What the New Guidance 06/2024 Says</h3>
Guidance 06/2024 sets out FINMA&#8217;s expectation that the identity of all persons holding stablecoins be adequately verified by the issuing institution or by appropriately supervised financial intermediaries. 
This expectation is based on the notion that the stabilization mechanism used by stablecoin issuers «generally» involves a stablecoin holder having a payment claim against the issuer at any time, which may be considered a deposit if the underlying assets are managed for the account and risk of the issuer (as previously communicated by FINMA in its <a href="https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/1bewilligung/fintech/wegleitung-stable-coins.pdf?sc_lang=en&amp;hash=68854A0D6DAFC3F8F1D4F1C9AF56BA4D">2019 supplement to its ICO guidelines</a>). It remains to be seen whether it will be applied equally to stablecoin arrangements not relying on a claim against the issuer as a stabilization mechanism or other similar arrangements involving counterparty risk.
In the new Guidance 06/2024, FINMA not only reminds financial intermediaries of the KYC/CDD requirements set out under the Anti-Money Laundering Act (identification of the customer; determination of the identity of the beneficial owner; repetition of the procedure in the event of subsequent doubts).
Guidance 06/2024 also refers to FINMA&#8217;s practice already published in its <a href="https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/finma-publikationen/geschaeftsbericht/20220405-finma_jahresbericht_2021.pdf">2021 Annual Report</a> (p. 19), according to which «contractual and, where appropriate, technological transfer restrictions are required for the issue of stable coins by supervised institutions. All persons disposing of stable coins must be sufficiently identified by the issuing institution or by adequately supervised distribution partners in order to comply with the due diligence obligations under the Anti-Money Laundering Act for all transactions with stable coins.» It further cites a <a href="https://www.newsd.admin.ch/newsd/message/attachments/86329.pdf">2024 report by the CGMF</a> (interdepartmental coordinating group on combating money laundering and the financing of terrorism), which characterizes this (at p. 28) as a technology-neutral application of the ban on bearer savings accounts contained in the Swiss Bankers Association&#8217;s Agreement on the Swiss Banks&#8217; Code of Conduct with Regard to the Exercise of Due Diligence (CDB 20), which applies primarily to banks licensed in Switzerland.
The new Guidance 06/2024 links this prohibition of anonymous transfers, which was previously primarily expressed in relation to banks, to the general obligations of all financial intermediaries under the Anti-Money Laundering Act.
In the <a href="https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/1bewilligung/fintech/wegleitung-stable-coins.pdf?sc_lang=en&amp;hash=68854A0D6DAFC3F8F1D4F1C9AF56BA4D">2019 supplement to its ICO guidelines</a>, FINMA had already stated that the Anti-Money Laundering Act is «almost always applicable» to stablecoins, albeit based on their use as a means of payment and thus not necessarily imposing any obligations on the issuer in the context of transactions without its direct involvement.
While apparently going beyond imposing KYC/CDD requirements on stablecoin issuers only at the points of issuance and redemption, we do not believe there should be a general requirement for stablecoin issuers to identify each individual holder beforehand if contractual or technological solutions (e.g. limiting transfers to VASPs complying with anti-money laundering requirements or other forms of whitelisting) ensure compliance with the Anti-Money Laundering Act.
Guidance 06/2024 sets out restrictions on the use of default guarantees issued by regulated banks as a means for stablecoin issuers to avoid being treated as banks themselves.
Under the Banking Ordinance, claims against stablecoin issuers guaranteed by a licensed bank are exempt from the treatment as regulated deposits and therefore do not cause the stablecoin issuer to carry on an activity requiring authorization under the Banking Act. According to FINMA, various stablecoin issuers in Switzerland use such default guarantees in lieu of an authorization under the Banking Act.
Guidance 06/2024 lists a number of requirements that must be met by a default guarantee in order for the exemption from the authorization requirement to apply:
<ul>
<li>Each customer must have their own claim against the Swiss bank issuing the default guarantee and been informed of the guarantee.</li>
<li>The default guarantee must cover public deposits with interest.</li>
<li>Claims to be covered by the default guarantee must not exceed its upper limit.</li>
<li>The specifics of the default guarantee must permit rapid guarantee calls by customers.</li>
<li>Defenses and objections by the issuing bank are permitted to the extent provided by law.</li>
<li>Customers&#8217; claims under the guarantee must become due at the latest at the time of the stablecoin issuer&#8217;s insolvency, i.e. at the latest at the time of the opening of bankruptcy proceedings against the stablecoin issuer, and not only at the time of the issuance of a certificate of loss.</li>
<li>If there are multiple default guarantees, the increased need for coordination and the resulting operational risks must be highlighted and adequately addressed.</li>
</ul>
Guidance 06/2024 emphasizes that in the event of irregularities at the stablecoin issuer, the bank providing the default guarantee may suffer reputational damage due to its contractual relationship with the issuer and may also be exposed to legal risks.
In addition, because stablecoin holders must have a direct claim against the bank issuing the default guarantee in the event of the bankruptcy of the stablecoin issuer, there is a risk that dishonest stablecoin holders may assert their claims under the default guarantee against the bank providing the default guarantee. In such cases, the legal and reputational risks would be compounded by high regulatory costs, in particular to comply with its obligations under the Anti-Money Laundering Act.
<h3>Assessment</h3>
Guidance 06/2024 comes against the backdrop of an international emergence and evolution of not only anti-money laundering but also prudential requirements for stablecoin issuers.
Most recently, on June 30, 2024, under the European Union&#8217;s Markets in Crypto-Assets Regulation (MiCAR), the issuance in the European Union of stablecoins referencing a single fiat currency (so-called «e-money tokens») was restricted to credit institutions and e-money institutions, and the issuance of stablecoins referencing multiple fiat currencies or other underlying assets (so-called «asset-referenced tokens») was restricted to credit institutions and firms that obtain specific authorizations.
In Switzerland, a bill amending the fintech license for payment service providers (including those using stablecoin) and providers of crypto assets is currently being drafted within the Federal Department of Finance and <a href="https://www.sif.admin.ch/sif/en/home/finanzmarktpolitik/financial-market-regulation/regulatory-projects/innovative-geschaefsmodelle.html">expected to be submitted for public consultation in 2025</a>.
It therefore seems to be consistent with these developments that FINMA&#8217;s Guidance 06/2024 emphasizes the link of stablecoin arrangements to the prudentially regulated sector by highlighting the prudential considerations to be taken into account by the bank issuing the default guarantee, which currently allows stablecoin issuers to operate only under anti-money laundering regulations, and the commonalities in the respective implementations of an anti-money laundering framework that FINMA expects from regulated banks and from not prudentially regulated stablecoin issuers.
This is underlined by FINMA&#8217;s reference to the potential fragility of arrangements involving stablecoin issuers outside the prudential perimeter on the basis of a bank-issued guarantee (e.g. operational aspects relating to the terms of the guarantee, but also the lack of deposit protection for holders of such stablecoins), although some of the constraints on the use of such guarantee arrangements to be exempt from an authorization requirement under the Banking Act, as well as certain residual concerns from a prudential perspective, go beyond their application in the context of stablecoins (as Guidance 06/2024 itself points out, and as is also clear from the discussion in the <a href="https://backend.efd.admin.ch/fileservice/sdweb-docs-prod-efdadminch-files/files/2024/04/30/9fb7f508-2522-428c-a192-23b975c48e93.pdf">Federal Council&#8217;s 2022</a> report on amendments to the fintech license regime).
While the requirements set forth in the text of Guidance 06/2024 are important (and potentially quite restrictive, particularly with respect to KYC/CDD requirements), Guidance 06/2024 also signals the need for stablecoin issuers to be prepared to adapt to a rapidly evolving regulatory environment and a broadening scope of prudential regulation.

FINMA Publishes Guidance on Stablecoins

Swiss Federal Council publishes Report on Banking Stability

Financing and Investment Products

Financial Market Regulation

Homburger News

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Homburger advises SIX Group AG in connection with the contemplated acquisition of Aquis Exchange Plc

Homburger acts as counsel to SIX Group AG in connection with the contemplated acquisition of Aquis Exchange Plc, which was announced on November 11, 2024. SIX Group AG operates a fully integrated exchange value chain across the Swiss and Spanish financial centres, thus ensuring access to the capital markets and the flow of information and money between financial market players. Aquis Exchange Plc is Europe&#8217;s challenger exchange, creating better markets for a modern economy. Aquis Exchange Plc has market-leading technology and innovative rules for trading, and offer primary listings and secondary trading of equities, along with global licensing of proprietary technology.
Homburger advises SIX Group AG with regard to all Swiss legal aspects of the acquisition.
The Homburger team is co-led by Jürg Frick and Stefan Kramer (both Banking / Finance) and includes Benjamin Leisinger, Stefan Bindschedler, Alexander Wherlock, Sofiya Shavlak and Riccardo Pompeo (all Banking / Finance) as well as Stefan Oesterhelt (Tax).

Capital Markets

Raiffeisen

Homburger advised Raiffeisen Schweiz Genossenschaft in the issuance of CHF 150 m 1.350 per cent. bonds due 2029 by Viseca Payment Services AG

On October 30, 2024, Viseca Payment Services AG successfully completed its issuance of CHF 150 m 1.350 per cent. bonds due 2029. Raiffeisen Schweiz Genossenschaft, UBS AG and Zürcher Kantonalbank acted as Joint Lead Managers.
The Homburger team was led by Benjamin Leisinger and included Daniel Hulmann (both Capital Markets).

hantef_grey_640x140

On October 24, 2024, HANetf ETC Securities plc, an Irish public limited company successfully listed its The Royal Mint Responsibly Sourced Physical CHF Hedged Gold ETC Securities (RMCH), ISIN being XS2892962718, issued under its metal securities programme for Exchange Traded Products, on the SIX Swiss Exchange.
Homburger advised HANetf ETC Securities plc on this transaction with respect to aspects of Swiss law and regulations, including listing regulations. The Homburger team comprised Benjamin Leisinger, Sofiya Shavlak and Yulia Shaburnykova (all Capital Markets and Financing and Investment Products).

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Homburger advises SIX Group AG in connection with the contemplated acquisition of Aquis Exchange Plc

Homburger advised Raiffeisen Schweiz Genossenschaft in the issuance of CHF 150 m 1.350 per cent. bonds due 2029 by Viseca Payment Services AG

Homburger advised HANetf ETC Securities plc on the listing of its Responsibly Sourced Physical Gold ETP

FINMA Circular "Duties of Conduct Under FinSA/FinSO"

FINMA Publishes Guidance on Stablecoins

Swiss Federal Council publishes Report on Banking Stability

Bericht des Bundesrates zur Bankenstabilität

Krypto- und Blockchain-basierte Finanzprodukte – Krypto ETPs

Banking & Finance: Switzerland (7th edition)

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Homburger advises SIX Group AG in connection with the contemplated acquisition of Aquis Exchange Plc

Homburger advised Raiffeisen Schweiz Genossenschaft in the issuance of CHF 150 m 1.350 per cent. bonds due 2029 by Viseca Payment Services AG

Homburger advised HANetf ETC Securities plc on the listing of its Responsibly Sourced Physical Gold ETP

FINMA Circular "Duties of Conduct Under FinSA/FinSO"

FINMA Publishes Guidance on Stablecoins

Swiss Federal Council publishes Report on Banking Stability

Bericht des Bundesrates zur Bankenstabilität

Krypto- und Blockchain-basierte Finanzprodukte – Krypto ETPs

Banking & Finance: Switzerland (7th edition)

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Benjamin Leisinger

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Teams

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Leisinger