Agreement between Switzerland and the United Kingdom (UK) on Mutual Recognition in Financial Services

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On 21 December 2023, Switzerland signed a first-of-its-kind financial services agreement with the UK (Agreement) after two years of talks which began after the UK left the EU. The Agreement uses outcomes-based mutual recognition of each jurisdiction’s financial services regulatory and supervisory regimes to facilitate cross-border trade in financial services to wholesale and sophisticated clients on the basis of deference, domestic law or other arrangements: 

  • Deference means that Country A (e.g. Switzerland) defers to the relevant standards of Country B (e.g. the UK) so that financial services providers that are regulated and supervised in the UK can provide services on a cross-border basis into Switzerland in accordance with the UK regime without having to comply with the Swiss regime.
  • Domestic law arrangements mean that authorised financial service providers in Country A (e.g. UK) may provide specified services on a cross-border basis into Country B (e.g. Switzerland) in accordance with Swiss domestic law.
  • Other arrangements apply in some cases.

The Agreement provides for mutual recognition of each other’s regulations in the sectors of banking, asset management, investment services, financial market infrastructures, OTC derivatives and insurance for wholesale and sophisticated clients. In some sectors, the Agreement unlocks new market access and in other sectors, where the UK and Switzerland already have liberal cross-border regimes, the Agreement introduces stabilising mechanisms to help maintain the status quo. It is not clear yet how AML-/CTF-regulations, in particular registration/licensing requirements and the conducting of actual AML-duties are treated under the Agreement. However, we assume that the AML-/CTF-regulations in the home jurisdiction of the financial service provider shall apply.

From the UK into Switzerland

From Switzerland into the UK

1. Corporate Banking

1.1. From the UK into Switzerland

Switzerland already has a liberal regime for cross-border banking services into Switzerland. The Agreement confirms market access for UK banks allowed to provide deposit taking (i.e. acceptance of deposits from the public on a commercial basis) and lending services to corporate clients on a cross-border basis into Switzerland. Deposit-taking activities can be provided by UK entities that are authorised under the UK regime to conduct such activity. Cross-border lending services can be provided to corporate clients by any entity that is incorporated or formed under the laws of the UK.

1.2. From Switzerland into the UK

The Agreement confirms the market access for Swiss banks and deposit-taking securities firms (but according to the wording of the Agreement not companies with a fintech license) to provide cross-border banking services (deposit-taking and lending activities) to UK corporate clients. Any legal entity incorporated or formed under the laws of Switzerland is further permitted to provide cross-border lending services to corporate clients in the UK.

2. Asset Management

Switzerland and the UK already have relatively open regimes for the marketing of funds. The Agreement confirms the existing national regimes for the marketing of collective investment schemes (into Switzerland) or alternative investment funds – but according to the wording of the Agreement not UCITS – (into the UK) to professional and high net worth clients in the UK / Switzerland. The Agreement further confirms the existing open regimes for the delegation of portfolio and risk management in respect of specified funds, so that UK and Swiss financial services firms can continue to delegate portfolio and risk management activities to financial service providers of both countries.

3. Investment Services

3.1. From the UK into Switzerland

The Agreement builds on the liberalised access that FCA authorised UK firms already have to the Swiss investment services market by introducing commitments designed to stabilise the access routes currently available to service institutional and professional clients, including high net worth individuals. The Agreement confirms that authorised UK financial services firms can provide financial services in accordance with the Financial Services Act (FinSA) and the Financial Institutions Act on a cross-border basis to eligible clients into Switzerland without triggering any licensing requirements. Eligible clients are institutional clients as defined by the FinSA, other professional clients in accordance with the FinSA and high net worth clients with assets of at least CHF 2 million (including private investment structures). Note that not all high net worth clients as defined by the FinSA are covered by the Agreement.

Client advisers who perform financial services on behalf of UK investment firms will no longer need to register individually with Swiss registration bodies to provide their services to Swiss high net worth clients with assets of at least CHF 2 million whilst in Switzerland, nor will they have to prove to these bodies that they meet the requirements necessary to provide their services to clients in Switzerland. Instead, their firm can confirm on their behalf that they meet the prerequisites for giving business or investment advice to Swiss clients. This will do away with the need to sit examinations and provide documentation relevant to the registration process. However, UK financial services providers still have to obtain professional indemnity insurance coverage and affiliate with a FinSA ombudsman, where such a duty to affiliate exists.

3.2 From Switzerland into the UK

Swiss banks (but not companies with a fintech license), Swiss securities firms, fund management companies, managers of collective assets and portfolio managers licensed by FINMA will have access to the UK market and be allowed to provide investment services and activities, and ancillary services without the need for any further UK authorisation or registration requirements either on a cross-border basis or by way of temporary local operations (provided this does not amount to a permanent establishment in the UK). Whilst the access granted is similar to Article 47 of UK MiFIR there are two improvements: Firstly, Swiss firms will have the choice of either continuing to rely on the overseas persons exclusion or using this Agreement to service firms in the UK; and secondly, Swiss firms can deal with sophisticated high net worth clients with net assets in excess of GBP 2 million (including private investment structures for such clients) in addition to per se professional clients and eligible counterparties under UK MiFIR. Swiss financial institutions can continue to apply Swiss law when offering their services into the UK market. The authorisation of cross-border activities is accompanied by a series of safeguards, such as disclosure and reporting obligations.

4. Financial Market Infrastructure, Central Counterparties

The Agreement provides for regulatory recognition decisions by both Switzerland and the UK, which will receive full benefit of the Agreement’s stabilising mechanisms to maintain the status quo. This will ensure that counterparties from both countries can provide clearing services relating to trading in financial instruments to the other country with greater certainty.

The Swiss regulator retains, however, the power to assess whether the UK central counterparty is systemically important and, if this is the case, request the UK counterparty to comply with certain measures under Swiss domestic laws.

The UK regulator keeps its existing power to assess the individual characteristics of Swiss central counterparties and require them to obtain their recognition before they are able to access the UK market. Such recognition may include a determination by the UK regulator as to whether a Swiss central counterparty is, or is likely to become, systemically important to the financial stability of the UK and, if this is the case, to request the counterparty to comply with authorisation requirements under English laws and comply with relevant organisational, conduct of business, prudential and supervision and enforcement requirements.

5. Financial Market Infrastructure, Trading Venues

The Agreement confirms the status quo of the mutual recognition of the general legal and supervisory framework for trading venues (i.e. a regulated stock exchange/investment exchange and multilateral trading facility). It includes commitments designed to stabilise the open access to Swiss and UK trading venues. The Agreement covers all services offered by trading venues.

6. Financial Market Infrastructure, OTC Derivatives

The Agreement provides that the UK and Switzerland will recognise certain risk mitigation rules of each other that are designed to reduce the risks associated with the trading of over the counter (OTC) derivatives. This means that UK and Swiss counterparties trading OTC derivatives transactions will be free to choose whether to rely on the recognised UK or the recognised Swiss risk mitigation rules. The risk mitigation obligations applicable to Swiss counterparties are set out in articles 107 to 110 of the Swiss Financial Market Infrastructure Act (FMIA). The UK risk mitigation rules are already today recognised as equivalent for the purposes of the FMIA. The UK recognises the Swiss risk mitigation as equivalent, except for standards and supervision of initial margin models and variation margin on physically settled foreign exchange swaps and forwards.

7. Insurance

7.1. From Switzerland into the UK

The Agreement covers selected lines of the non-life insurance business for large corporate clients, including distribution activities of intermediaries, and confirms the current access of Swiss firms to provide cross-border insurance services to large UK corporate clients.

7.2. From the UK into Switzerland

The Agreement provides new access for UK insurers and intermediaries to the Swiss insurance market for many wholesale lines of business to large corporate clients that goes beyond what Switzerland has offered to any other trading partner to date. The recognition includes the provision of policies in the space of renewable energy, directors’ and officers’ liability, sellers’ and buyers’ warranty, indemnity and cyber insurance. However, provisions of life, accident and health insurance, liability insurance for non-covered lines of business, monopoly insurance of any kind or business interruption insurance are not in-scope and do not benefit from mutual recognition. Certain insurance intermediaries from the UK will also be exempt from the new Swiss requirements for overseas insurance brokers to localise in Switzerland under the revised Insurance Supervision Act, which came into effect on 1 January 2024. The UK will be the only country in the world not required to do so, which puts British brokerage firms at a significant advantage to international competitors.


The Agreement underlines the thriving trade relationship between the UK and Switzerland. According to the UK Treasury between 2016 and 2022, UK trade in financial and insurance services with Switzerland grew by 53% – reaching GBP 3.28 billion in 2022. In many areas, both Switzerland and the UK already have liberal regimes when it comes to allowing cross-border access to their respective markets. The Agreement legally binds the existing open access to financial services between the two countries creating legal certainty and takes it a step further by granting new market access in certain sectors. The Agreement overall aims at a more integrated and efficient financial services landscape between Switzerland and the UK, allowing firms to operate across borders with fewer regulatory restrictions, such as for UK financial advisers who no longer need to register with Swiss registration bodies in order to serve certain high net worth Swiss clients. Furthermore, Switzerland and the UK have already agreed in a side letter to explore options for closer cooperation in other areas, including benchmarks, credit rating agencies, trade repositories, recognition of reporting and clearing obligations for OTC derivatives and the application of OTC derivatives intragroup exemptions for domestic firms. Following the signing of the Agreement, the Swiss Federal Council will prepare its dispatch and submit the same to the Swiss Parliament later this year. The Agreement requires approval by the parliaments of both jurisdictions before entering into force.

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