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Market access

Market access

Access to foreign markets is of strategic importance for ensuring the Swiss financial centre’s ability to remain competitive.

The preservation of a significant portion of added value and jobs in Switzerland also depends on the future success of the banks in Switzerland in asserting their position as one of the leading global financial centres. Autonomous action alone will not bring about the desired results for protecting market(s) access. In order to gain market access, political agreement must also be reached with the various partner states. Different measures should be taken simultaneously to this end, as a number of goals are likely attainable in the shorter-term, while others will require more time.

There are three different types of market access:

  • Onshore presence: A Swiss bank services its foreign customers through a subsidiary and/or branch in the customer’s country of domicile.
  • Active cross-border: Existing foreign customers are serviced and new customers are actively acquired out of Switzerland.
  • Passive cross-border: Existing customers abroad are provided with standard services and/or if applicable, new customers are acquired abroad, but only on the customers’ own initiative.

Why is market access important?

  • Private banking: More than half the assets managed in Switzerland originate from to foreigners, over 40% of these assets are estimated to belong to Europeans.
  • Asset management: Swiss banks can manage EU-based collective investment schemes, provide institutional asset management for pension funds in the EU, and sell Swiss financial products in the EU.
  • Corporate clients business: Currency transactions, bond and equity issues in the other EU countries, are facilitated for Swiss banks.

Goal: Securing non-discriminatory market access abroad

Switzerland is striving to secure non-discriminatory market access to EU/EEA markets as well as to growth regions in order to preserve its ability to export Swiss financial services and foster future growth.

Marktzugang

What does the banking sector need?

In contrast to other export industries in the goods sector, market access restrictions are increasingly preventing export-oriented Swiss banks from meeting legitimate customer needs and keeping value creation, jobs and tax revenues in Switzerland. Unlike Switzerland, key target markets have in recent years adopted protectionist measures which strongly restrict cross-border financial transactions. In addition to this, customer needs have also changed significantly. While in the past, the focus was primarily on the secure preservation of assets in a reliable jurisdiction and the associated confidentiality, clients today are increasingly looking for active and performance-oriented services. Both personal contact with client advisors and interaction through new means of communication are an important part of this. Many studies show that the international wealth management business remains a growth business. Without regularised market access, Swiss banks are at a significant competitive disadvantage compared with their competitors in the EU. Market access is just as essential for the finance industry as it is for the watch, engineering or wine industries. It is therefore not a “nice to have”, but rather a clear necessity in order to be able to take advantage of the opportunities for Switzerland and the finance industry in a forward-looking manner.

To achieve improved market access, the sector has in the past pursued a number of mutually independent approaches:

  • Bilateral agreements: Agreements which allow for improvements to market access with individual, strategically important EU countries. To date, it has only been possible to reach such an agreement with Germany.
  • Equivalence strategy: Key elements of Swiss financial market regulation are recognised as equivalent to EU regulations. However, the relevant recognition processes are currently one-sided, inefficient and, in some cases, heavily politicised (e.g. stock market equivalence). In addition, the scope of the existing EU third-country equivalence regime is restricted to certain activities, certain customer categories (professional clients) and certain products. Even if it is handled in an efficient and depoliticised manner, the EU regime cannot cover the needs of the Swiss banks’ cross-border business with private customers (technically retail customers).
  • “Financial services agreement” (FSA): A key, necessary component of an FSA in the traditional sense is an alignment of Swiss financial market legislation with EU regulations.
  • Onshore presences in EU countries: A number of Swiss banks have established subsidiaries in the EU. These do not, however, solve the problem. EU customers continue to be primarily interested in the cross-border provision of services out of Switzerland.

A number of external factors (e.g. Brexit) have also prevented the desired progress from being achieved with these approaches. For the banking industry, unlike other sectors, the fundamental matter at hand is not just “further developing” Switzerland's bilateral path. New avenues are needed in the area of cross-border banking, securities and investment services. In concrete terms, practicable market access solutions which cover banking, wealth management and investment advisory services in particular, are required. The sector has therefore tabled clear concerns as part of the discussions surrounding a framework agreement with the EU. It is currently focusing on the following approaches:

  • Placing the existing processes for the recognition of equivalence in the area of finance on a stable and reliable foundation. They should be depoliticised, addressed swiftly and settled;
  • Finding practicable market access solutions at the EU level. These should at least provide market access to interested institutions, without Switzerland having to implement EU regulations for the entire banking sector;
  • In parallel to this, improving the current equivalence regime;
  • An actual FSA is not currently an area of focus, but it could remain a strategic option from a longer-term perspective.

Reaching an InstA would likely be a prerequisite for all of these approaches.

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