European Securities Market & Private Swiss Trust Structures: Accessing Euroclear
Accessing the European Securities Markets through Swiss Private Trust Companies
Swiss private trust companies have become a popular choice for investors around the world to access European securities markets. This is because Switzerland is known for its robust and reliable financial system, its strong privacy laws, and its favorable tax regime. In this blog post, we will explore the ways in which investors can use Swiss private trust companies to access European securities markets.
What is a private trust company?
A private trust company is a type of trust that is set up to manage the assets of a single family or group of individuals. It is typically managed by a small group of directors who are appointed by the beneficiaries of the trust and who have a close relationship with the family or individuals involved.
How does a private trust company work?
A private trust company operates much like a regular trust, but with a few important differences. The most notable of these is that the private trust company is owned and operated by the shareholders, rather than by a third-party trustee.
In addition to this, private trust companies in Switzerland have all the features typically associated with a stock corporation. Legally, it can act as a commercial vehicle and operate for itself or a client’s mandate. This is one of the core reasons why Swiss PTCs are the worlds most sought after commercial vehicle.
European Securities: Global Impact
The European securities market is one of the largest and most significant financial markets globally. It plays a crucial role in facilitating capital raising, investment, and trading activities across Europe.
Key Exchanges: The European securities market is home to several prominent stock exchanges, including the London Stock Exchange (LSE) in the United Kingdom, Euronext in multiple countries (such as France, Belgium, the Netherlands, and Portugal), Deutsche Börse in Germany, Borsa Italiana in Italy, and SIX Swiss Exchange in Switzerland.
Regulation: The European securities market is subject to regulatory frameworks designed to ensure transparency, investor protection, and market integrity. Key regulations include the Markets in Financial Instruments Directive (MiFID II) and the European Market Infrastructure Regulation (EMIR). FINMA is responsible for Financial Market regulation in Switzerland.
Market Participants: The European securities market attracts a wide range of participants, including institutional investors, retail investors, investment banks, asset management firms, brokerage firms, and market makers. These participants engage in activities such as trading equities, bonds, derivatives, and other financial instruments. One of the most under appreciated sectors in this regard is the family office market, which is an active player when it comes to private investments. The average family office in Europe has an AUM of USD 1.5 Billion.
Harmonization Efforts: The European securities market has seen ongoing efforts to harmonize rules and regulations across member countries. This harmonization aims to enhance cross-border investment, reduce fragmentation, and improve market efficiency. In effect, issuers who choose to raise financing from Europe are doing so via a single market. This process is made even smoother when done from Switzerland due to the country's flexibility on accounting standards used to supply certified financial statements. Switzerland has the dual benefit of participating in the EU market without subjecting itself to the over-regulation that Europe is sometimes decried for. In particular, Swiss legislation such as the Financial Market Infrastructure Act & Financial Services Act has brought immense clarity to the duties and responsibilities placed upon Swiss issuers.
Innovation and Fintech: The European securities market has witnessed significant innovation and the emergence of fintech companies. These companies are leveraging technology to provide new trading platforms, alternative financing models and digital asset offerings. The Swiss are directly responsible for the logic and mathematical rules of the instruments being traded across Europe today. In conjunction with this, Europe has seen Private Equity activity before it was even called Private Equity. Venture Capital and alternate asset classes play a significant role in the European economy.
Bond Market: The European securities market features a substantial bond market, with both government and corporate bonds being traded. Government bonds issued by countries such as Germany, France, Italy, and Spain are considered benchmarks for the broader European bond market. The European bond market is substantial and represents a significant portion of the global bond market. Here is a table showcasing the approximate size of the European bond market.
Country: Approximate Size of Bond Market (in USD)
Germany: $5.9 trillion
France: $2.6 trillion
Italy: $2.5 trillion
Spain: $1.4 trillion
Netherlands: $1.1 trillion
Sweden: $670 billion
Switzerland: $640 billion
Belgium: $570 billion
Austria: $500 billion
Other European countries (combined): $4.5 trillion
Total European Bond Market: $20.8 trillion
Please note that these figures are approximate and represent the combined value of government and corporate bonds outstanding in each respective country. The values may vary based on fluctuations in the market and changes in the composition of the bond market over time.
Additionally, the bond market in Europe is extremely well-regulated and supervised by a network of differing agencies and regulatory authorities. Therefore, apart from its market footprint, it is extremely attractive for companies looking to raise.
Cross-Border Trading: The European securities market enables cross-border trading, allowing investors to access stocks and other financial instruments from various European countries without significant barriers.
Advantages of using a Swiss private trust company:
Switzerland is known for its strong privacy laws and favorable tax regime, which make it an attractive location for investors looking to access European securities markets. In addition, Swiss private trust companies offer a number of advantages over other types of investment vehicles, including:
Flexibility: Private trust companies can be tailored to the specific needs and goals of the shareholder involved.
Control: The shareholder has greater control over the management of their assets than they would with other types of investment vehicles.
Tax efficiency: Swiss private trust companies can offer significant tax benefits for investors. There is no capital gains tax in Switzerland.
Single Regulation: A Trust company that issues a bond from Switzerland can use the same prospectus it created there in other countries within the European Union. This saves considerable fees and time involved in the process of raising capital.
Concluding Thoughts
Swiss private trust companies provide investors with a unique opportunity to access European securities markets. With their specialized knowledge and expertise, they can provide investors with a number of advantages, such as tax efficiency and reliable asset protection. They can help investors to maximize returns by providing access to a wide range of European markets, allowing them to diversify their investments. Additionally, Swiss private trust companies can offer support and guidance to investors, helping them to navigate the complex regulations that govern European securities markets. They can also provide investors with access to a network of experienced financial advisors and professionals who can provide valuable insights and advice.
Furthermore, Swiss private trust companies can offer investors access to sophisticated risk management tools, allowing them to make informed investment decisions. All of these advantages make Swiss private trust companies an attractive option for investors looking to access European securities markets.
By investing in a private trust company in Switzerland, individuals or entities can benefit from the country's strong financial system, favorable tax regime, and robust privacy laws, while also enjoying greater flexibility and control over their assets. If you are considering using a Swiss private trust company for your investments, please get in touch and we’d be happy to guide you through the process.
