Name
Global FinTech Guide
Country _ Name
Switzerland
SectionTitle
Trading platforms / social trading platforms / signal following
Body
FinTechs belonging to this category operate trading platforms or online marketplaces for investment opportunities or certain financial contracts – e.g. securities, factoring etc. and sometimes furthermore provide contact to financial experts and tools for the decision-making.

FinTech-signalling and social trading platforms provide users with the opportunity to exchange opinions on financial investments and offer signal providers and traders the possibility to make their securities portfolio publicly visible. This way the portfolios can be linked to and followed by other traders via the platform automatically, so that the trading and investment strategy of the followed traders can be copied.

The platform often cooperates with a financial services provider or a credit institution where both the trader and the follower hold their securities accounts, and which execute the orders both of the trader and the follower and to which the platform passes on the trading decisions.

Introduction

Attitude of the country towards trading, social trading or signalling platforms

The climate towards trading, social trading or signalling platforms is positive. Such trading platforms put the established banks under pressure resulting in declining transaction and brokerage fees.

Legal affairs

Obligations and requirements to provide trading, social trading or signalling platforms described above

Trading platforms whose purpose is the simultaneous exchange of bids between several participants and the conclusion of contracts based on non-discretionary rules without listing securities qualify as multilateral trading facilities in the meaning of the Financial Market Infrastructure Act (“FinMIA”) and are regulated under FinMIA as trading venues. Trading venues require an authorisation from FINMA and are subject to certain organizational and self-regulation obligations such as the obligation to issue regulations for the organisation of orderly and transparent trading and the establishment of an own regulatory and supervisory organisation, appropriate for its activities. Foreign financial market infrastructures do not require a license from FINMA: However, they may have to obtain recognition from FINMA, which usually is granted if the foreign trading venue is subject to appropriate regulation and supervision, and if the competent foreign supervisory authority:

  • does not have any objections to the cross-border activity of the foreign trading venue;
  • guarantees that they will inform FINMA if they detect violations of the applicable laws or other irregularities on the part of Swiss participants; and
  • provide FINMA with administrative assistance.

Social trading and FinTech-signalling platforms that offer their users the execution for securities trading and the maintaining client accounts as well as the holding of securities of its users may trigger the license requirement for a securities firm under the FinIA. If such platform holds cash positions of users, such activity may trigger a license requirement under the Swiss Banks and Savings Banks Act (“BankA”) as it may qualify as accepting deposits from the public. However, if such positions are held temporarily for the purpose of settlement of transactions, these positions may be exempted under the BankA and, hence, may not qualify as deposits. If a platform holds a license under the BankA, no additional license as a securities firm is required. The licensing requirements under BankA and FinIA only apply to Swiss based service providers whereas the strict cross-border provision of respective services is not subject to such licensing requirements. Foreign based services providers are subject to the BankA and FinIA rule if they maintain a permanent physical presence in Switzerland.

If t
rading platforms, social trading or signalling trading platforms execute orders in financial instruments (see definition above) for customers in Switzerland, such may trigger requirements for the financial service provider to comply with certain conduct rules and organisational rules (see enumeration above). Such platforms may even engage in portfolio management if customers of such a platform authorise the platform to automatically execute transactions in financial instruments based on the portfolio and the trading activity of a reference trader (e.g. mirror trading). 

Currently, there is no specific legal regulation regarding platforms on which solely financial information are exchanged. Any legal implications will be assessed on the basis of the provisions governing the provision of financial services.

Additional comments regarding the legal situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area

N/A.

Economic conditions

Market size for trading, social trading or signalling platforms and biggest companies in this business area

There is no reliable data available for FinTech trading, social trading or signalling platform providers in Switzerland. Swiss online trading/broker providers are 5trade, BKB-Easy Trading, Saxo Bank, Strateo, Swissquote, money-net, Corner Trader, and Trade direct (all with a FINMA license). Also, established banks have online trading platforms, such as Bank Cler, CS, Migros Bank, Bank Finance, UBS, VZ Depotbank, and Zürcher Kantonalbank.

Additional comments regarding the economic situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area

N/A.

Authors

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