The current Swiss regulatory framework governed by the Swiss Regulatory Authority (“FINMA”), allows asset managers, with the exception of those managing Swiss domiciled collective investment schemes for which regulation is mandatory, an option to be regulated by FINMA subject to certain conditions. This system was primarily developed in order to cater to Swiss asset managers which wished to manage European Union (“EU”) UCITS, and which in order to do so were required to be subject to regulation in their home jurisdiction.

The Swiss Federal Council has published a draft partial revision of the Collective Investment Scheme Act (“CISA”) which provides for the compulsory regulation of all Swiss asset managers in order to better ensure investor protection, which was deemed appropriate partly as a result of significant losses to Madoff related schemes by certain Swiss investors, and to comply with the EU’s Alternative Investment Fund Managers Directive. It is anticipated that the revised CISA will enter into force at the beginning of 2013.

The State Council’s Preparatory Commission has issued proposed amendments to the Federal Council’s draft. Some of these revised proposals include provisions to lessen the impact of the initial proposals in response to protests from the asset management industry for example by including a de-minimis rule which provides exemptions from license requirements for certain asset managers.

If Swiss asset managers themselves become subject to regulatory oversight this would appear to largely diminish the attractions for them in using unregulated offshore funds and encourage them to use regulated structures such as Irish QIFs or Luxembourg CIFs. As Ireland is the leading European jurisdiction for alternative funds, with the number of QIFs reaching an all time high this month and assets reaching a new peak of €182 billion – up 20% in 12 months and 35% in 2010, it would appear best placed to take advantage of any developments in this regard.