What exactly is the difference between the requirement for the KID for european investors and for Swiss investors. In the blogpost of thepoorswiss, it sais that the KID needs to be available in every language of the member states of the EU. Is this correct?
I found that the Swiss KID needs to be in one of the four national languages or English, so it may be much easier to comply for smaller fund providers. Do you think it is realistic, that at least one fund provider that offers cheap US funds will comply and provide a KID document?
No, it’s unlikely (why would they care when they already have UCITS ETFs for the European market?). It’s more likely they’d be allowed to market it based on US prospectus.
(And even more likely that since 1) reverse solicitation is allowed 2) change in existing positions are allowed, brokers targeting more experienced people will just let people continue trading them anyway)
They = the major providers (ishares, vanguard, etc.).
I just don’t see what the incentive is for them, Swiss market is small comparatively (and the institutional traders are not restricted and can still access the ETFs).
(Plus they’d make more money if people switch to the UCITS version :))
Art. 109 FinSO provides that a prospectus for securities offered to the public in Switzerland or admitted to trading on a trading venue must be published no later than six months after the authorisation of a Prospectus Review Office by FINMA, i.e. from 1 December 2020.
Edit: Seems like UBS stopped allowing people to trade US ETFs, when I check VTI in my account I get:
Ce produit est proposé uniquement en Suisse, ainsi qu’aux investisseurs domiciliés en Suisse, en possession du statut d’investisseur qualifié au sens de la Loi suisse sur les placements collectifs (LPCC). Il peut faire l’objet de restrictions ult.
It’s still work probably need to have legal department sign off at least, plus ongoing maintenance to make keep an eye on regulation changes that might impact it.
Also I’m not sure there’s blanket approval for US prospectus (I tried figuring out the list of foreign equivalence but haven’t so far).
In the end depends how big the swiss retail market is (I assume it’s fairly small, for a given fund might be what, 0.01%?).
Not really, there’s also some increased regulatory risk. At least in my field (software engineering) I wouldn’t add a feature that had almost no users (because I’ll have to maintain it forever).
There’s also the opportunity cost, could the legal department work on more important things during that time?
I don’t trade at UBS, but there’s no reason they wouldn’t let you sell, that’s how all brokers have implemented those trade restrictions.
And if they follow the regulation by the letter, they might let you increase a position you already hold, so if you already have VTI you might be able to buy more, but since I don’t trade with them I didn’t check how they implemented it, I was just curious if they’d let you enter a position.
No, but IB is less retail than UBS, I reread my customer agreement with IB and they make it clear they’re execution only (they don’t market anything). So technically they’d still be fine (if they decide to, nobody is forcing them).
If you check the UBS docs, they actually mention the execution only side is fine (you can access the US ETFs), but they also decided they don’t do execution only with retail clients.
The prospectus requirements are already in place since a few weeks, what’s in 2022 are some of the KID requirements. But for e.g. IB prospectus related regulations should be as much of an issue as the KID ones (otherwise I don’t know why UBS would have bothered implementing things a year early).
Just to confirm: the whole issue about loosing access to US based ETFs is valid for both European and US based brokers? I have read in two different places that if you use an US based broker no restrictions will apply.
residents of Switzerland are still not eligible to purchase US ETFs or ETNs. Please check back in the future for any changes.
Not sure how the setup currently works, but at least a few years ago Swiss resident opened accounts through their U.K. entity, if I remember correctly.
They’ve gotten the communication wrong before though.
My (afaik) UK account does not seem to be restricted (didn’t place the trade, but I could go to the review your trade screen with no warnings).
In any case, maybe we should wait and see what and if anything happens
Seems like at least for the banks/brokers who want to restrict things, the restriction is already done (e.g. UBS).
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probably need to have legal department sign off at least, plus ongoing maintenance to make keep an eye on regulation changes that might impact it.
Thanks a lot