The Difference Between a Bank License and an SRO License

In Switzerland, a bank license and an SRO (Self-Regulatory Organisation) license are two distinct licenses required for financial institutions to operate.

A bank license is issued by the Swiss Financial Market Supervisory Authority (FINMA) and permits an institution to conduct banking activities such as accepting deposits, granting loans, and providing payment services. To obtain a bank license, an institution must meet various regulatory authorisation requirements for banks, including minimum capital requirements, organisational structure, risk management, and compliance with anti-money laundering regulations.

On the other hand, an SRO license is issued by a self-regulatory organization recognized by FINMA. An SRO license is required for financial intermediaries that are not banks but engage in activities such as asset management, securities trading, and financial advice. The SRO oversees and enforces compliance with regulations and industry standards for its members.

The main difference between the two licenses is the scope of activities that an institution can engage in. While the much more stringent bank license enables an institution to engage in a wide range of banking activities, an SRO license is limited to financial intermediaries engaged in specific activities.

Moreover, the level of regulatory oversight and supervision also differs between the two licenses. FINMA directly oversees banks and has a more active role in regulating their activities. In contrast, SROs operate under the supervision of FINMA but are primarily responsible for the direct regulation of their members.

Understanding the distinction between a bank license and an SRO license is a valid question when trying to understand the global financial landscape. A bank license empowers institutions to undertake comprehensive banking activities, subject to rigorous regulatory scrutiny. On the other hand, an SRO license offers a tailored path for financial intermediaries involved in specialised functions, ensuring adherence to industry standards through the oversight of recognised self-regulatory organisations. The choice between these licenses carries significant implications for the scope of operations and the extent of regulatory oversight. As financial institutions chart their course in Switzerland, a clear comprehension of these licenses’ nuances is essential for strategic decision-making and successful operation within the country’s dynamic financial ecosystem.

Marvin Rowe, LL.M.