Swiss Financial Market Supervisory Authority issues new risk diversification ordinance for banks and securities firms replacing two circulars from 1 January 2027

The Swiss Financial Market Supervisory Authority has published a new Ordinance on the Risk Diversification of Banks and Securities Firms that moves two existing circulars on intra-group positions and risk diversification into binding ordinance form. The measure largely recasts the current framework rather than rewriting it, with only limited substantive changes linked to the final Basel III reforms already in force under the Federal Council’s Capital Adequacy Ordinance. The new ordinance enters into force on 1 January 2027, when Circulars 2013/7 and 2019/1 will be repealed. The ordinance covers connected counterparties, limits on exposures to foreign group companies, calculation of certain trading book positions, risk mitigation and relief for smaller banks. Following consultation, FINMA included a transition until 31 December 2027 for banks using the Basel III final market risk standardised or model approaches to calculate trading book positions, extended the 50 percent weighting relief for category 4 and 5 banks on short-term interbank positions to certain intra-group exposures, and clarified the treatment of positions to central counterparties, guarantees from foreign group companies and residential property financing under the small-bank reliefs. FINMA said the transfer to ordinance level was welcomed by the majority of respondents.