Retrocessions and execution-only – validity of a waiver


In a new decision 4A 574/2023, 4A 576/2023, dated 24 May 2024 and published on 26 June 2024, the Swiss Federal Supreme Court confirms and specifies the validity of a waiver clause in relation with execution-only mandates as well as investment advisory agreements.

The Swiss Federal Supreme Court previously ruled that, in the context of asset management agreements, a waiver is only valid if the amount of retrocessions in relation to the assets under management is disclosed.

More recently, the Swiss Federal Supreme Court ruled that a waiver indicating the amount of retrocessions by reference to a percentage per class of assets (without reference to the assets under management) was "not insufficient" in case of execution-only mandates (4A_496/2023, dated 27 February 2024).

Now, the Swiss Federal Supreme Court has gone even further and ruled that the principles developed in the context of asset management agreements are not directly applicable to relationships where clients themselves order the transactions (i.e. execution-only and advisory).

This confirms that, in the case of execution-only mandates as well as investment advisory agreements, a waiver disclosing the applicable percentage of retrocessions per class of assets is valid. According to the Swiss Federal Supreme Court, in the absence of a management agreement, the assets under management can obviously not be a criterion. 

This new decision comes as a confirmation of the reasoning contained in several decisions rendered by some chambers of the Geneva First Instance Court (see our comments in a previous publication: Insights | Schellenberg Wittmer ( It is also in line with the new FINMA's circular "Rules of conduct under FinSA" (in consultation) regarding execution-only and transaction-based advisory mandates. The additional requirements, i.e. the range in relation to the value of the portfolio, applies to asset management and investment advice taking into account the client's entire portfolio (portfolio-based advice). Provided that the draft circular remains unchanged, civil law and regulatory rules would therefore be aligned. In this case, the Swiss Federal Supreme Court did not explicitly make this distinction (transaction-based vs. portfolio-based advisory), presumably because the question did not arise and only transaction-based advice was provided.

Unfortunately, the Swiss Federal Supreme Court did not take this opportunity to rule on whether an obligation of restitution exists in the context of execution-only mandates, considering that, in the case at hand, the parties did not discuss the principle of restitution.

To be continued…


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