New Rules For The Creation Of Side Pockets

The Federal Council adopted the amended Collective Investment Schemes Ordinance (CISO) on 31 January 2024. Not only did the revised CISO introduce the legal basis for the Limited Qualified Investor Fund (L-QIF)", but it also made selective adjustments to other areas. This includes the regulation governing side pockets for Swiss collective investment schemes. The new regulation entered into force on 1 March 2024.

1. Introduction

On 31 January 2024, the Federal Council published amendments to the CISO for the introduction of the LQIF. It also included the new art. 110a entitled Segregation of individual investments" in the CISO.

In view of the numerous liquidity crises that have occurred on the financial markets in recent years and the inability to create side pockets in Swiss collective investment schemes, the purpose of art. 110a CISO is to create a legal basis for side pockets. However, there is some doubt as to the practicality of the proposed procedure.