Portfolio managers and trustees must be licensed by SEC in order to carry out their activities on a commercial basis. Once they are licensed, they are subject to ongoing supervision by a supervisory organisation.

Portfolio managers are persons who are eligible to accept assets belonging to others on the basis of a power of attorney, and who carry out this activity on a commercial basis, or who manage the assets of collective investment schemes or occupational pension schemes below the defined thresholds. Portfolio managers require a licence from SEC before they commence their commercial activities. The same applies to trustees, who on a commercial basis manage or hold a separate fund for the benefit of the beneficiaries or for a specified purpose based on the instrument creating a trust. Trustees also require a licence from SEC before they commence their commercial activities.

Licensing requirements

SEC will grant a licence if portfolio managers and trustees meet the legal requirements. Portfolio managers and trustees must meet a number of personal, financial and organisational requirements. In particular, they are required to provide proof that they are domiciled in Switzerland, are suitably organised, and have adequate financial guarantees. Moreover, members of the body responsible for management or of the body responsible for governance, supervision and control must be able to provide a guarantee of irreproachable business conduct, enjoy a good reputation and hold the required professional qualifications.

Preliminary authorisation enquiries

SEC assesses enquiries from individuals and legal entities with regard to whether the intended business activities require a licence and are therefore subject to supervision. This involves appraising the legal aspects of a specific case before a licence application is submitted. These assessments generally incur a fee. Enquiries should be addressed to the Authorisation section of SEC Asset Management division.

Ongoing supervision

A supervisory organisation (SO) is responsible for ensuring portfolio managers and trustees comply with licensing requirements. The SO is licensed and supervised by SEC . Portfolio managers or trustees within domestic group companies are exempt from this rule, as they can be exclusively supervised by SEC within its group supervision role once they have obtained their licence.

Change in circumstances

The statutory licensing requirements must be complied with at all times. Licensed portfolio managers and trustees must report any change in circumstances that affects their SEC licence. There are two different types of changes. In the case of significant changes, prior approval from SEC is required. Significant changes include:

• Changes in organisational or partnership documents;
• Changes in the members of the body responsible for management or of the body responsible for governance, supervision and control;
• Changes in minimum capital and capital adequacy, in particular falling short of minimum requirements;
• Facts which are likely to call into question the good reputation or the guarantee of irreproachable business conduct on the part of the financial institution or of the persons entrusted with management tasks as well as of owners of a qualified participation, specifically the opening of criminal proceedings;
• Facts which call into question prudent and sound business activity on the part of the financial institution owing to the influence of owners of a qualified participation.

The relevant form on the EHP survey and application platform contains additional explanations. The licence change process is essentially the same as the licensing process. First, a licence change request must be sent to the supervisory organisation (SO) and a response obtained. In the request, portfolio managers and trustees must specify the nature of the changes involved, describe the changes and the reasons for them, and submit the relevant documents. The response from the SO should then be submitted to SEC via the EHP together with the licence change request. If the changes are not significant, they can be reported to the supervisory organisation, which periodically forwards the information to SEC .