Generally speaking, securities funds need to fulfil the same requirements as UCITS funds and are subject to same rules on eligible assets and investment restrictions.
As with UCITS, they are also permitted to:
Securities Funds are regulated pursuant to Art. 53 – 57 CISA
- Engage in securities lending;
- Enter into repurchase agreements and reverse repurchase agreements;
- Borrow, on a temporary basis, up to 10 per cent of the fund’s net assets;
- Use derivatives, including for investment purposes; and
- Pledge or give collateral,
Unlike UCITS, CISA securities funds can only pledge or transfer as collateral up to 25 per cent of the fund’s net assets.
On 1 January 2015 the revised regulations of CISO-FINMA regarding the use of derivatives under the commitment came into force (with Transition rules until 1 January 2016). The new requirements effectively brought the arrangements for Swiss funds into line with UCITS funds, implementing the European “Commitment approach” according to CESR-Guideline 10-788 into Swiss law.
In Switzerland, this is referred as the Commitment-II approach, with the earlier Swiss approach known as the Commitment-I approach.
Master-Feeders are also permissible, again consistent with the UCITS provisions.