Newsflash MiFID II

Commodities trading: ESMA has issued comprehensive data determining the EU overall commodities derivatives turnover that help commodities traders to assess whether their trading activities in commodity derivatives can be considered as ancillary to their main business under MiFID II.

Commodities traders trading in commodities derivatives either listed on an EU domiciled trading venue or OTC with a counterparty domiciled in the EU will have to apply for a license under the MiFID II regime that will enter into force on the 3rd of January 2018, unless an exemption applies. One key exemption applicable to commodities traders is the so called “ancillary activity exemption”. The “ancillary activity exemption” comprises a series of tests and compares in particular the proprietary speculative trading activities in commodities derivatives of a commodity trader to the EU overall market trading activity in certain commodities derivatives categories. The EU overall market trading activities in commodities derivatives either being traded on an EU domiciled trading venue or OTC with a counterparty domiciled in the EU have so far not been easy to determine due to missing public data. ESMA has now published EU overall market trading turnover data in the MiFID II-affected commodities derivatives categories.

Commodities traders should now – if they have not already done so – start to evaluate whether they can take advantage from the ancillary activity exemption and how to comply with the rest of MiFID II.

We had the great fortune to be able to assist many commodities traders in their MIFID II implementation and would be delighted to assist also you.

Please call for your free consultation.


Martin Liebi
Head Commodities Trading Regulation
Tel. +41 76 341 65 43

Synopsis of the most important regulatory developments in the banking and asset management industry

Status as of June 2017

The most important regulatory developments with comments to important aspects/changes and status:

  • Interdisciplinary issues
  • Banks/securities dealers
  • Fund management companies/investment funds/representatives of foreign collective investment schemes



Bruno Gmür
Technical Partner Financial Services Banking
PwC Schweiz
+41 58 792 7317

Latest Level 3 ESMA Q & As related to MiFID II/MiFIR

ESMA published and updated in the last couple of days additional Level 3 Q&A papers. Due to the specification and clarification purposes of the Level 3 papers, this should help you during the implementation phase and could clarify open questions. Please find the relevant June and May 2017 Q&As below.

PwC provides you with this Newsletter an overview of the latest questions related to the following topics:

  1. Investor Protection
  • Information on costs and charges
  • Post-sale reporting
  • Appropriateness / complex financial instruments
  1. Transparency
  • None-Equity transparency
  • Pre-trade transparency waivers
  • The systematic internaliser regime
  • Data reporting services providers
  • Third country issues
  1. Market Structure
  • Direct Electronic Access (DEA) and algorithmic trading
  1. Commodity Derivatives
  • Position Limits
  • Ancillary Activity
  • Third country issues

Read the whole article.

We are happy to discuss with you any thoughts and issues or are happy to review your solutions with regard to MiFID II and MiFIR. Please do not hesitate to contact us.

Günther Dobrauz
Leader Legal FS Regulatory &
Compliance Services
+41 58 792 14 97

Michael Taschner
Senior Manager
PwC Legal FS Regulatory and
Compliance Services
+41 58 792 23 25

Orkan Sahin
PwC Legal FS Regulatory and Compliance Services
+41 58 792 1994

Swiss pension outcomes are falling – could “matching” be part of the answer?

Low, even negative, interest rates and uncertain growth prospects is becoming a “new normal” in Switzerland. The impact on pension fund finances is well documented – pressure on funding levels, tough to find the right investment opportunities and focus on cost transparency. This environment also poses challenges for insured members, and as a result their employers. Expected retirement outcomes have fallen. What does this mean for employees and employers? 

10 years ago an insured person would expect higher returns on any money they invest for retirement than they would today. The mandatory interest credit for Swiss pension plans according to BVG/LPP was 2.50% in 2007 compared to 1.00% today.  Ten-year Swiss government bonds yields have fallen from 2.6% to -0.1% in the same period. This not only affects expected returns on the assets set aside but also the cost of providing an income for life after retirement. Life expectancies for retiring pensioners have increased by about 1 year for females and 2 years for males in that time which also needs to be funded.

All of these factors have had a major impact on retirement outcomes. Based on our calculations, in 2007 a 40 year-old could invest CHF 7’100 and expect a pension of a CHF 1’000 a year for that investment. Today a 40 year-old would expect to have to invest CHF 14’700 – more than doubling of the cost of retirement over 10 years. In that time, inflation expectations have also fallen, but overall the cost of retirement has increased.

What can pension funds do?

Pension funds aim according to our experience to maintain the level of retirement benefits they provide while financing the promises already made. But pension funds are in a “zero-sum” game – without extra funding, members will ultimately receive lower benefits on average when results are not what was expected. Robust analysis and forecasting of what employees can expect to receive, combined with clear communication may be the best what they can do. Other measures are down to employees and employers as recipients and sponsors of retirement benefits.

What does this mean for individuals and employers?

Find higher returns? In conventional collective Swiss plans, employees share in the overall returns of the fund as they are credited to them. This limits opportunities to take more risks, with an expectation of higher returns. For higher earnings, it is possible to have individual strategies through a “1e” pension plan. These plans can be used to seek higher returns, but this may not be suitable for all.

Later retirements? Without saving more, employees have to retire later for the same outcome.  In some ways this is only reasonable: If life expectancies increase without changing retirement ages, the proportion of life we spend in retirement rises. Employers may have to prepare for the ageing effect on their business – not only their workforce recruitment and retention, but possibly their business strategy and target markets.

Employers pay more? One answer may be employers paying more. But employers face economic challenges themselves, with increasing competition and pressure for results. For most companies, raising costs or investing cash may not be palatable.

Employees pay more? Creating more awareness of the individual options available for the employees is one option. Additional voluntary employee contributions are typically deductible for tax purposes. Some employees don’t have confidence in their pension plan and are not keen to lock away money until retirement.

How can companies create further incentives for employees to pay more? A look abroad could help.

Could “matching” be part of the solution?

In the US as well as the UK, contribution “matching” is widely used in pension plan design. Employer contributions are adjusted to “match” those of employees. When an employee contributes a percentage of their salary into the plan, the employer contributes an amount directly linked to what the employee pays. This could be 1:1 – i.e. if the employee pays 2% of pay, employer pays the same. Or some ratio like 2:1 or 1:2.

The big advantages of matching are two-fold: it encourages employees to pay more; and it focuses employer spending where it is most valued by its employees. One of our clients challenged the common Swiss plan option of employers paying the same for all employees, whereas employees can choose their level: “Why can employees choose to pay less, but I cannot follow when they do?” A reasonable question that matching helps to address.

The challenge is that legislation in Switzerland currently restricts the ability to apply matching within the regular plan. The law requires the employer contribution rate to a pension plan to be the same for all employees in the same situation (e.g. age, grade etc). “Matching” can be done through the buy-in system. So with the right plan design, matching can be incorporated within the Swiss plan.

This won’t for every situation as the use of buy-ins is subject to certain caps and restrictions which may become a barrier. Plan administration may be more complex. But in challenging times for pension outcomes, new solutions may be needed.


Richard Köppel
Pensionskassen-Experte SKPE, People and Organisation
Tel. +41 58 792 11 72
Adrian Jones
Director, People and Organisation
Tel. +41 58 792 40 13

EU: Anti-Tax Avoidance Directive II (“ATAD II”) formally adopted

On 29 May 2017 the Council Directive amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries (“ATAD II”) was formally adopted by the EU Council. Political agreement on this Directive had already been achieved at ECOFIN level on 21 February 2017.

The amended Directive (ATAD II) has a broader scope than ATAD I (adopted in 2016 and effective as of 2019) as it also covers hybrid mismatches with third countries and extends the hybrid mismatch definition to cover more categories of mismatches (e.g. to include arrangements involving PEs, hybrid transfers, imported mismatches, reverse hybrid entities and rules on tax residency mismatches). The terms and concepts contained in ATAD II are very similar to those in the OECD’s BEPS Action 2 recommendation as it currently stands.

The EU Member States will need to transpose the provisions of ATAD II by 31 December 2019 into their national laws and apply them per 1 January 2020. Only exception is the reverse hybrid entity rule for which the EU Member States will need to transpose by 31 December 2021 and apply per 1 January 2022. Nevertheless, payments to reverse hybrids will no longer be deductible from 1 January 2020.

We strongly recommend multinationals with Swiss & EU operations to review their structures to consider whether any of the new rules applies. In particular also Swiss entities benefiting from e.g. the Swiss finance branch and the Swiss principal taxation rules (to the extent still applicable in 2020 depending on timing and outcome of the Swiss Corporate Tax Reform 17 project) should review a potential impact by these rules on a case by case basis.

For more information please find below the newsletter from our EUDTG Network:



Armin Marti
Partner Tax & Legal Services, Leader Corporate Tax Services
+41 58 792 43 43

Anna-Maria Widrig Giallouraki
Senior Tax Manager
+41 58 792 42 87

The art of operational liquidity management – Mastering the regulatory wave

Despite the fact that global monetary policy is injecting liquidity into the market and that liquidity should be ubiquitous, the management of liquidity is on top of the agenda for universal banks. Banks around the world are deeply concerned by and interested in operational liquidity management.

This is due to, firstly, the changed perception of operational and market risks triggered by the financial crisis in 2008. During the crisis, some seemingly liquid financial resources quickly became illiquid and impacted banks.

Secondly, while it is important for banks to hold a certain level of capital during the ‘good’ phases of economic cycles, regulators have realised that it is even more important and useful to know how a bank’s financial resources, balance sheet and P&L behave during economic slowdowns or even in financial depressions. This resulted in the current regulatory wave, in which banks need to comply with the global and local liquidity regulations introduced in the wake of the crisis (e.g. Basel III, CRD IV, Swiss Liquidity Ordinance ERV).

Thirdly, an accumulation of fines in relation to tax transparency matters and the US subprime crisis or other penalties has led to significant cash outflows for some institutions and augmented the need to improve the liquidity function.

In this paper we analyse and discuss:

    • The current liquidity regulatory trends in the market
    • The actual challenges and those that are coming in the near future
    • The existing gaps at operational level
    • Our view and takeaways to face these challenges
    • PwC Switzerland’s service offerings

Read Attachment

For further information, please contact:

Patrick Akiki
PwC Switzerland
Tel. +41 58 792 2519

Marc Lehmann
PwC Switzerland
Tel. +41 58 792 2650

The countdown is on: one year to get ready for the EU General Data Protection Regulation GDPR

On 25 May 2016 the EU General Data Protection Regulation (GDPR) entered into force. After the elapse of the 2-year transposition period, it will become directly applicable on 25 May 2018.

The new EU data protection legislation introduces substantial changes for companies dealing with personal data: As a selection, the new requirements on transparency, on proportionality as well as on documentation when processing personal data are among the key changes. These are significant challenges for companies. In addition, the new legislation substantially improves the rights of the concerned individuals – the data subjects. Thanks to the GDPR, they now have clear-cut rights with regard to companies processing their data. Inter alia the key rights include the right on information, on rectification and deletion of personal data, on restriction of processing, on portability as well as the right to object processing. As data controllers, companies have to be able to comply with all these rights.

Besides new duties and compliance obligations for companies, data protection authorities are given new competences and enforcement instruments. Standing out are the new sanctions of up to the amount of EUR 20m or 4% of the international annual turnover of the concerned company, whichever is higher.


Swiss companies that (e.g. because they do business in the EU) are subject to the GDPR now have one year to make the necessary adaptions to comply with the GDPR. The new requirements are to be analyzed, gaps to be identified and mitigation actions to be planned and implemented. It is important to be prepared.


Susanne Hofmann
Legal Compliance Leader
+41 58 792 17 12

Michael Adrian Meyer
Legal Services – Senior Manager
+41 58 792 51 31

Reto Häni
Partner and Leader Cybersecurity
+41 58 792 75 12

Idir Laurent Khiar
Legal Services – Assistant Manager
+41 58 792 17 51

Prospects for Future Economic Cooperation between China and Belt & Road Countries

The Belt and Road Forum for International Cooperation (BRF) was held in Beijing from 14 to 15 May 2017. According to China’s Ministry of Foreign Affairs, 29 heads of states and governments attended the highest level of international conference held by China since the major initiative was put forward by President Xi Jinping in 2013. Economic cooperation is expected to be the top priority of this forum. So which areas are likely to achieve breakthroughs?

In our latest PwC analysis on the B&R initiative, Prospects for Future Economic Cooperation between China and Belt and Road Countries, we look at how the B&R initiative is reshaping the future economic cooperation between China and B&R countries.

Here are the major future prospects for economic collaboration between China and B&R countries:

  • Signing free trade agreements may be the most effective way for China to expand its trade with B&R countries
  • Opening up stock and bond markets for B&R countries will provide more investment opportunities for Chinese business
  • Promoting RMB internationalisation in major B&R economies rather than in the developed countries is more likely to be successful
  • Domestic preferential policy support will be critical in encouraging Chinese companies to invest more in the B&R countries

Read Attachment

Live PwC IFRS 17 webcast

IFRS 17 is coming – Why should you care about it?

In May 2017, the IASB will be finalising its long-standing project on insurance accounting and publish IFRS 17.

As an insurer, you will need to apply IFRS 17 for annual periods beginning on or after 1 January 2021. IFRS 17 will fundamentally change the accounting for all entities that issue insurance contracts and investment contracts with discretionary participation features.

Join our live webcast on IFRS 17, ‘Insurance Contracts’, on 31 May 2017 when we’ll be joined by Darrell Scott, an IASB board member. During the webcast you’ll get:

  • An overview of the accounting requirements
  • Practical issues that your organisation should consider in relation to IFRS 17
  • Expected implementation challenges

Webcast details

Date: Wednesday 31 May 2017

Time: 11:00 (GMT + 01:00)



You will receive a link to join the webcast from Alex Bertolotti, our Global IFRS Insurance Leader, nearer the time.


Patrick Maeder
Partner – FS Advisory
PwC Switzerland
+41 58 792 4590

Switzerland: New social security treaty between Switzerland and China

A social security treaty between Switzerland and the People’s Republic of China (China) will enter into force on 19 June 2017. The maximum posting period is 72 months. For the duration of the posting employees (regardless their nationality) are exempt from the compulsory insurance obligations of the country of occupation which are covered in the social security treaty. As from 19 June 2017 it will be possible to obtain a Certificate of Coverage.


Click here for more details



Véronique Schaller
+41 58 792 5036

Natalia Graf
+41 58 792 4324