FINMA issues new ordinance on risk diversification for banks and securities firms
Switzerland's financial regulator FINMA consolidates two circulars into a single ordinance to meet format compliance under the Financial Market Supervision Act.
Swiss financial regulator FINMA announced the publication of a new ordinance that brings together two existing circulars on risk diversification for banks and securities firms. The move satisfies the format‑compliance requirement set out in Article 7(1) of the Financial Market Supervision Act.
FINMA, the authority responsible for overseeing Switzerland's banking and securities markets, regularly updates its regulatory framework to ensure stability and protect investors. By integrating the circulars, the agency aims to streamline the rules governing how financial institutions spread risk across their portfolios.
The ordinance consolidates the earlier circulars that detailed diversification standards for credit, market and operational risk. It clarifies the expectations for institutions to avoid concentration in any single asset class, counterparty or geographic exposure, thereby enhancing overall system resilience.
The legal basis for the change is Article 7 paragraph 1 of the Financial Market Supervision Act, which mandates that regulations be issued in a prescribed format. FINMA’s action brings the diversification rules into compliance with that statutory requirement.
Banks and securities firms operating in Switzerland will need to review their risk‑management frameworks to align with the unified ordinance. The regulator expects institutions to adjust internal policies, reporting processes and governance structures to meet the clarified diversification criteria.
Analysts note that the ordinance could improve comparability of Swiss risk‑management practices with those of other major financial centres, potentially easing cross‑border supervisory coordination. While the change does not introduce new risk limits, the clearer regulatory language may reduce compliance costs and enhance supervisory oversight.
The publication underscores FINMA’s ongoing commitment to maintaining a robust regulatory environment amid evolving market conditions, reinforcing the stability of the Swiss financial system.
Helena covers corporate news for listed and private companies across Europe, from strategy shifts to leadership changes, with an eye for what a story signals about the broader market.
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