FinSA – Information on Investor Protection
FinSA – Information on Investor Protection (PDF)
The Swiss Financial Services Act (FinSA) entered into force in January 2020. With a transition period of two years, most of the requirements will be applicable as of January 2022. The Act introduces new rules to strengthen investor protection and enhance transparency of financial instruments. In terms of content, FinSA is closely aligned with European regulation.
The below constitutes important information on the implementation of FinSA by Saxo Bank (Switzerland) Ltd.
I Contact and Licensing Information
Saxo Bank (Switzerland) Ltd. (‘Saxo Bank’) is authorised to operate as a bank and securities dealer in Switzerland. Saxo Bank’s supervisory authority is the Swiss Financial Market Supervisory Authority (FINMA).
Saxo Bank is authorised to provide the full range of banking services, including order execution, portfolio management, safekeeping services and operation of a bilateral organised trading facility in relation to certain derivatives transactions.
Contact Details and Supervisory Authority:
|Saxo Bank (Switzerland) Ltd.|
|Swiss Financial Market Supervisory Authority FINMA|
II Client Classification
FinSA differentiates between the following client classifications: ‘Retail’, ‘Professional’ and ‘Institutional’. Each classification is assigned a different level of investor protection. While Retail Clients are afforded the highest level of protection, Institutional Clients are afforded the lowest level of investor protection.
In particular, investor protection provisions in relation to the following topics do not apply to Professional Clients or do so to a lesser extent:
- Information about product risk is provided to Professional Clients in less detail (in particular no Key Information Document must be provided to Professional Clients).
- When conducting a suitability and/or appropriateness test, Saxo Bank may assume that Professional Clients have the relevant knowledge & experience.
- Safeguards by certain national regulators in relation to Contracts for Difference (CFDs) do not apply to Professional Clients.
- Professional Clients are partially or completely exempt from investor protection according to the Swiss Collective Investment Scheme Act.
For private clients, client classification depends mainly on their knowledge, experience and financial situation. Corporate clients are normally classified according to their size or regulatory status.
If not communicated otherwise by Saxo Bank, clients will be treated as Retail Clients, thereby receiving the highest level of investor protection. A reclassification request can be made via the platform or by contacting Saxo Bank directly and will be considered subject to regulatory requirements.
III Services Rendered by Saxo Bank
Saxo Bank renders a range of financial services, but is mainly active in the area of execution and/or transmission of client orders (execution only). Saxo Bank further renders (automated) portfolio management services. Saxo Bank does not render advisory services, i.e. does not issue personal recommendations in relation to financial instruments.
For each financial service rendered by Saxo Bank, the respective contractual terms and conditions agreed with the client are applicable.
IV Risk Information Related to Trading (Execution Only)
Trading in financial instruments entails risks. In particular, trading in leveraged financial instruments, such as but not limited to, foreign exchange, derivatives and commodities can be very speculative and losses and profits may be subject to extreme and rapid fluctuation. Losses can exceed deposits on margin products.
Saxo Bank encourages all clients to visit the section ‘Risk Warning’ on the Saxo Bank website. The SBA Brochure ‘Risks Involved in Trading Financial Instruments’ and the ‘Risk disclosure statement for margin products including CFDs’ disclose relevant risks related to certain types of financial instruments.
Furthermore, Saxo Bank makes product information sheets (e.g. KIDs) available for all financial instruments in the pre-trade ticket where they have been provided by the issuer.
V Risk Information Related to Portfolio Management
Risks related to portfolio management services rendered by Saxo Bank are described in the relevant contract and in the Risk Disclosure for SaxoSelect on the Saxo Bank website.
VI Product Universe
Saxo Bank offers trading in a range of third party products which are normally traded on a trading venue (e.g. equities, debt securities, ETFs, structured products, futures) as well as a range of Saxo Bank products which are normally traded over the counter with Saxo Bank as the counterparty (CFDs, FX spot, forwards, OTC options).
In relation to portfolio management services, Saxo Bank’s current universe consists mainly of third-party products (e.g. ETFs and equities).
VII Suitability and Appropriateness Test
For its core business, the execution and/or transmission of client orders, Saxo Bank will carry out an appropriateness test, i.e. review whether the client has the necessary knowledge and experience to understand the risks of a certain product type.
In relation to its automated portfolio management services, Saxo Bank will carry out a suitability test. In addition to clients’ knowledge and experience, Saxo Bank will review their risk capacity and investment objectives.
For clients that have their assets managed by an external portfolio manager, Saxo Bank does not carry out an appropriateness test or suitability assessment. These obligations apply exclusively to the external portfolio manager.
VIII Best Execution
FinSA requires that Saxo Bank takes all reasonable steps to obtain the best overall result in the execution of client orders. The best possible result is not only limited to the execution price, but also includes a variety of other factors, such as speed, likelihood of execution and likelihood of settlement. Saxo Bank’s approach to best execution is regulated in the Order Execution Policy which is available here.
With respect to certain OTC products, Saxo Bank acts as a bilateral organised trading facility when executing orders or transactions. Post-trade transparency reports that Saxo Bank provides in its capacity as a bilateral organised trading facility are published on Saxo Bank’s website and can be downloaded here.
IX Costs and Compensation
All costs related to trading in financial products are available on the Saxo Bank website or via the pre-trade ticket on the platform. Costs related to portfolio management services are available on the platform and on the Saxo Bank website for the respective SaxoSelect or any other portfolio management strategy. Clients can further create a portfolio report with a cost summary which provides information on financial services cost and financial instruments cost.
Compensation is a benefit Saxo Bank may receive from another legal entity (typically from fund providers) that is not paid directly by a client or on behalf of a client. Saxo Bank currently receives compensation only in relation to collective investment schemes. The calculation parameters and the bandwidths of such compensation are shown to the client in the pre-trade ticket of the relevant collective investment scheme. Clients can further review compensation in the cost summary of the portfolio report. Upon request, Saxo Bank will disclose the actual amount of compensation received. The client waives the right to the compensation Saxo Bank retains.
If a client has established an account relationship with Saxo Bank via a third party (e.g. introducing broker), Saxo Bank may pay such third party a one-off or ongoing compensation for services rendered to the client by such third party. Any such third party is bound to comply with its own obligations related to such compensation (e.g. disclosure obligations, handling of conflicts of interest etc.).
X Conflicts of InterestIn accordance with FinSA, Saxo Bank has set up a conflicts of interest policy that governs the identification, documentation, management, mitigation and disclosure of conflicts of interest. The conflicts of interest policy can be downloaded here. The policy contains a list of circumstances that may give rise to a conflict of interest. In line with the policy, Saxo Bank ensures that conflicts of interest are managed in order to prevent them from being detrimental to the client’s interests. Where this is not possible, Saxo Bank will disclose the conflict of interest to the client.
Client feedback and complaints can be addressed with the client’s relationship manager or via the support centre. If the provided answer or solution is not to the client’s satisfaction, the client can fill out the online complaints form which will be addressed to the Legal Department. If it proves impossible to reach a solution by mutual consent, each client can contact the Swiss Banking Ombudsman. He is the ombudsman responsible for Saxo Bank and runs a free and neutral information and mediation office where the client can initiate mediation proceedings.
Swiss Banking Ombudsman