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Recent developments in the regulatory environment for alternative investment service providers

February 2010 - Finance. Legal Developments by Walder Wyss Ltd.

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In the wake of the recent crisis in the international credit markets, alternative investment funds are also a target for new regulations, while Switzerland and other prominent financial centres continue to compete to attract alternative investment funds and asset managers. This article outlines recent developments in the Swiss regulatory environment for alternative investment service providers.

The alternative investment sector is of considerable importance to the Swiss financial services industry. In 2006, private equity and hedge funds made up 6.7 percent of the contribution of the financial sector to the GDP and employed approximately 4000 people, compared to 4.9 percent and 4100 employees for the mutual fund sector. There is strong support in Switzerland’s parliament and its executive branch of government for promoting the development of the alternative investment sector. The Federal Act on Collective Investment Schemes (CISA), which came into force on 1 January 2007, introduced two new legal forms for vehicles specifically intended for use by hedge funds and private equity investment funds: the limited partnership for collective capital investments (LLP) and the investment company with fixed capital (SICAF). The CISA has had limited success in attracting investment managers to use the new investment vehicles, however. As of December 2009, only seven LLPs have been established and a SICAF has yet to be formed.

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