IMPACT FOR FINANCIAL INTERMEDIARIES OF FINMA SMALL BANK REGIME
Following a successful pilot project, the Swiss Financial Market Supervisory Authority FINMA has now introduced the regime for small banks at circular level as of 1 January 2020. Small, but particularly liquid and well-capitalised banks can from now on be exempted from some prudential requirements. This is in line with FINMA's approach of proportional supervision and regulation. FINMA has amended eight FINMA Circulars in response to the introduction of the regime.
Who can benefit from the regime for small banks and the simplified rules
Financial institutions with a banking or securities dealer licence can benefit from supervision categories 4 and 5, and currently over 200 such institutions are subject to FINMA supervision. These include cantonal and regional banks, private banks, securities dealers and asset management banks. These institutions may request exemptions under the small bank regime, provided they have high liquidity and are highly capitalised.
Implementation of the regime for small banks as of 1 January 2020
The small bank regime provides that such banks and securities dealers are relieved of supervisory requirements. The aim is to increase the efficiency of regulation and supervision for small, well-secured financial institutions. To ensure that the security and stability of small banks are not jeopardised, the institutions are given a regulatory regime, for example at the level of the Capital Adequacy Ordinance, which is far less complex than the previous supervisory requirements. Following the launch of the idea for the small bank regime in 2017, the new procedure was successfully tested at 68 institutions in a pilot phase lasting several months.
Following a hearing on the partial revision of the eight FINMA circulars, the regime for small banks has now been definitively implemented as of 1 January 2020. FINMA has received a great deal of positive feedback on the new regulation from the institutions involved and the participants in the consultation process and, in line with the new regime for small banks, has adapted the Circular to define the new regulation. The adapted FINMA Circulars can be found below.
Facilities and exemptions for participation in the regime for small banks
The eight updated FINMA Circulars reveal, among other things, the following facilitations for small banks:
In accordance with its media release of 27.11.2019, FINMA will provide banks and securities dealers in supervisory categories 4 and 5 with written information on the further procedure and registration process for the regime for small banks.
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