Dressed for Trading, Built for Holding

01 — A Standard Whose Time Had Come

This article examines a structural problem that the Swiss structured products market has managed for years without a formal framework: the design, risk management, and investor disclosure requirements of tracker certificates, ETFs, and Actively Managed Certificates linked to underlyings that do not exhibit sufficient trading liquidity to support the product's implied liquidity profile. The SSPA's May 2025 Guidelines on Tracker Certificates linked to Non-Tradable Underlyings provide the occasion and the regulatory anchor. They are also — as the analysis that follows suggests — a beginning rather than a resolution.

The Guidelines represent the Swiss structured products industry's first formal acknowledgement that a category of products had been designed, marketed, and distributed without adequate differentiation from standard trackers on liquid underlyings. A tracker certificate on a basket of Swiss blue-chip equities and a tracker certificate on a portfolio of collectible watches are not the same product. They share a legal form and a payoff structure, but they differ in every dimension that governs the investor's actual experience: the reliability of the price, the feasibility of the exit, the mechanics of redemption, and the conditions under which those mechanics may fail. The Guidelines establish a minimum standard for recognising and disclosing that difference. They do not specify how the difference should be managed.

What prompted the guidelines is visible in the market. The past decade has seen structured products issued against an expanding universe of non-tradable underlyings: private equity and private credit, real estate, infrastructure, art, wine, watches, cars, and digital assets without functioning secondary markets. Each offered something genuinely valuable — return characteristics, diversification, or inflation linkage unavailable in listed markets. Each also brought the same structural problem: the instrument implied a liquidity profile the underlying could not deliver. The mismatch was managed case by case, within existing frameworks, until the scale of the asset class made a dedicated standard necessary.

02 — What the Tradability Test Reveals

The Guidelines provide a four-criterion test for tradability (Art. 6): an underlying is tradable if it is listed on a regulated trading venue or MTF under the Swiss Financial Infrastructure Act or equivalent foreign regulation (explicitly including MiFID II venues), if a bank or securities firm has committed to daily bid/ask quotes as market maker, if it qualifies for inclusion in the issuer's trading book under the Capital Adequacy Ordinance or equivalent Basel framework, or if it would be designated as held-for-trading under IFRS or US GAAP.

Each criterion measures something real. Listing on a regulated venue means continuous price discovery through a functioning order book. A committed market maker means a counterparty has accepted the obligation to quote at a defined spread, absorbing inventory risk continuously. Trading book eligibility means a bank's own risk framework has concluded the position can be dynamically hedged. Held-for-trading accounting means management's intention and the asset's characteristics support short-term realisation at or near fair value. Fail all four tests, and none of these conditions holds. The underlying has a value. It does not have a price in any operationally reliable sense.

The FAQ to the Guidelines provides the practical catalogue of what fails the test: real estate, private equity, hedge funds, collectibles, wines, watches, cars, and art. This list is a signal, not an exhaustive taxonomy. It covers almost the entire universe of assets that have attracted structured product issuance over the past decade precisely because they offer return characteristics unavailable in listed markets — and precisely because they cannot deliver those characteristics through a liquid structured product without significant structural compromise. The mismatch is commercial, not accidental.

Consequences of non-tradability — SSPA FAQ, Art. 10

• Larger bid/offer spread on the tracker certificate, reflecting the underlying's illiquidity premium and valuation uncertainty
• Extended time periods and adverse prices for buying or selling the non-tradable underlying when replicating or unwinding the hedge
• Higher costs for realising, recovering, or remitting hedging proceeds
• Postponement of redemption and/or modification of the redemption amount — the most material consequence for the investor, and the one furthest from the expectation created by the product's headline terms

The last consequence — postponed or modified redemption — matters most at the moment it is invoked. It is also the one that most directly contradicts the implicit promise every structured product makes: that the investor can access their value when they need to. The Guidelines name this consequence. They do not specify the conditions under which it is triggered, the maximum extent of postponement, or the investor's recourse when it occurs.

03 — Seven Structural Responses to a Gap That Cannot Be Closed

The Guidelines acknowledge the consequences of non-tradability without specifying how the mismatch should be managed. That engineering problem has seven structural responses. Each is a partial solution. Each is honest about one part of the problem and defers or conceals the rest. The choice between them — and the disclosure of that choice and its failure conditions — is the most important design decision in a non-tradable underlying product, and the one the Guidelines leave entirely to the issuer.

A — Match the product's liquidity profile to the underlying

The cleanest structural response: if the underlying cannot be sold continuously, the product should not offer continuous redemption. Interval structures with quarterly or semi-annual redemption windows, tender offer mechanisms, defined lock-in periods with scheduled exit dates, and non-listed structures with no secondary market are all expressions of this approach. The product's liquidity profile is explicitly aligned with the underlying's — the investor knows at the point of purchase that they are committing capital for a defined horizon and accepts that constraint.

This approach eliminates the structural mismatch but does not eliminate the commercial challenge. Most distribution of structured products occurs through channels that expect continuous liquidity. A product without it competes at a disadvantage. The commercial pressure to offer more liquidity than the underlying supports is therefore strongest precisely where the investor base is least equipped to understand the implications of illiquidity.

B — Hold a liquidity reserve

The product accumulates cash beyond what the investment mandate strictly requires, maintaining a buffer that can fund redemptions or limited secondary purchases without requiring forced sales of the underlying. In doing so, the issuer is effectively acting as the market maker for its own product — absorbing redemption demand from its own balance sheet rather than routing it to an external secondary market. The investor's ability to exit therefore depends not on a functioning market but on the issuer's willingness and financial capacity to honour that role.

The cost is a structural performance drag: the cash buffer earns less than the underlying. The risk is that redemption pressure in a stress scenario exceeds the buffer precisely when it is most needed, triggering the suspension or gating the reserve was designed to avoid. A liquidity reserve sized for normal conditions provides limited protection under stress — and the correlation between redemption demand and underlying asset difficulty is almost always positive.

C — Permit leverage to fund redemptions

The product borrows to fund redemption requests rather than liquidating the underlying. Again, it is the issuer acting as de facto market maker in its own product — this time funded by external debt rather than accumulated cash. This preserves the portfolio and avoids forced sales, but converts illiquidity risk into credit risk. If the leverage facility is withdrawn or repriced at the same moment redemption pressure spikes — a historically frequent coincidence, since counterparties and investors tend to respond to the same stress signals — the position becomes acutely fragile.

D — Appoint a committed market maker

A bank or securities firm commits to quoting bid/ask prices for the product on a secondary platform. This provides the investor with an exit mechanism without requiring the issuer to liquidate the underlying on demand. The SSPA Guidelines acknowledge that a committed market maker with daily bid/ask quotes at an appropriate spread and quote size, prominently disclosed, may justify a deviation from the non-tradable labelling requirement.

The key words are "appropriate spread" and "quote size." A market maker quoting a product on a non-tradable underlying cannot hedge continuously. The spread must therefore compensate for fundamental valuation uncertainty, not just execution cost. In stressed conditions, the market maker may withdraw the commitment entirely — leaving the product without a secondary market at the moment one is most needed.

E — Lock-in structure with no secondary trading

The most honest structural response: no secondary market, no redemption window before maturity, no pretence of continuous liquidity. The investor commits capital for a defined period and accepts that exit occurs at maturity — or not before it. This is the private placement model, standard in private equity and real asset investment, and the structure that most accurately represents what an illiquid underlying actually is.

It is also the structure most consistently avoided by issuers seeking broad distribution. A lock-in structure requires the investor to genuinely understand and genuinely accept illiquidity at the point of commitment. The result is a persistent gravitational pull toward structures that offer more liquidity optionality than the underlying supports — and a persistent underestimation by investors of what they have actually bought.

F — Hybrid and dynamic mechanisms

In practice, most structures are hybrids: a liquidity reserve supplemented by a market maker for small trades, a lock-in with limited redemption windows, a leverage facility capped at a fraction of NAV combined with a reserve buffer. Each combination introduces additional conditions under which components may fail and additional interactions that are not individually obvious. A reserve adequate for normal conditions may prove insufficient when the market maker simultaneously widens spreads and reduces quote size. The more components in a hybrid structure, the more scenarios exist in which multiple components fail simultaneously — and the more disclosure is required to give an investor any realistic prospect of understanding them.

G — Synthetic exposure via derivative instrument

The issuer does not hold the non-tradable underlying directly but instead enters into a derivative contract — most commonly a total return swap — with a large financial institution. The FI delivers the economic performance of the underlying to the product; the issuer pays a funding rate. Operationally, this simplifies the issuer's management: no custody, no direct dealing in the illiquid asset, clean balance sheet treatment. The FI's balance sheet and structuring expertise absorb the exposure management.

But the structural problem is relocated, not resolved. The FI that has written the swap must itself hold, hedge, or otherwise manage exposure to the non-tradable underlying. At maturity or on early termination, the FI must unwind its position in the same illiquid asset, facing the same absence of reliable pricing and the same exit constraints. The settlement amount the investor ultimately receives reflects what the FI could actually realise — and if the underlying could not be sold at the carried valuation, the consequences are identical to those under direct holding, now mediated through ISDA close-out mechanics rather than the product's own general conditions.

Two additional risks are introduced. First, counterparty risk on the FI: the investor's position depends on the FI's continued performance. Second, early termination risk: the ISDA Master Agreement grants termination rights on defined events — credit deterioration, additional termination events, material adverse change — that are independent of the underlying's performance and may force an involuntary exit at an unfavourable time and price. The SSPA tradability test is also unaffected: economic exposure via a derivative does not substitute for actual tradability, and the labelling obligation applies regardless of how the exposure is constructed.

Note — The total return swap is the most commonly used instrument for synthetic exposure to non-tradable underlyings. The same structural logic applies to any derivative or financial instrument capable of transferring the risk and return profile of the underlying — including performance swaps, structured notes issued by the FI to the product, forward contracts, or synthetic proxy baskets constructed from correlated liquid instruments. The choice of instrument affects documentation, regulatory capital treatment for the FI, and close-out mechanics, but does not alter the fundamental conclusion: the underlying's illiquidity is relocated, not resolved.

Each structural mechanism is honest about one part of the liquidity problem and defers another. The investor absorbs the deferred part under conditions they did not model and were not equipped to model.

04 — What Happens at the Limit

The Guidelines address the product's behaviour in normal operating conditions. They do not address what happens when the structural mechanisms reach their limit — at maturity with an underlying that cannot be sold, or under stress before it. This is where the abstract risk of illiquidity becomes a concrete outcome for the investor.

A — Pre-maturity exit options

Beyond the seven structural mechanisms, investors have several practical exit routes before maturity. None is guaranteed; all involve costs that reflect the underlying's illiquidity.

• Secondary market transfer — bilateral OTC negotiation, or SIX Swiss Exchange trading where the product is listed. Price reflects the full illiquidity discount. Practical in normal conditions; largely unavailable when stress is precisely the reason for wanting to exit.
• Issuer buyback — bilateral approach to the issuer for early redemption at the cost of unwinding the hedge. Not a right; relationship-dependent; unavailable when the issuer itself is under balance sheet pressure. Many investors do not know to ask.
• Tender offer — issuer-initiated repurchase at a stated price. Voluntary; price reflects the issuer's preferred exit, not the investor's fair value. Typically used to manage the issuer's own exposure.
• Transfer to a distressed buyer — specialist vehicles acquiring illiquid or distressed structured product positions at a discount. Limited secondary infrastructure in Switzerland; investor crystallises a loss but achieves liquidity.
• In-kind redemption — investor receives the underlying asset directly rather than cash. Only viable where the underlying is divisible, transferable, and the investor has the capacity to hold and manage it. Requires explicit contractual provision.
• Novation or assignment — transfer of the debt claim to a third party. Requires terms that permit transfer, the absence of legal restrictions on the instrument, and a willing counterparty at an agreed price.

B — Maturity event when the underlying cannot be sold

When the product reaches its stated maturity with an underlying that cannot be liquidated at a value consistent with the redemption formula, three outcomes are possible. Each is governed by a different legal mechanism — and the mechanism available depends on what was built into the product at issuance.

Prolongation — the issuer exercises a unilateral right reserved in the product's terms and conditions to extend maturity. No bondholder consent is required if the right is properly drafted. In economic substance, prolongation converts a fixed-maturity product into an open-end one at the issuer's discretion. Most Swiss structured product terms neither bound the extension period nor require the issuer to demonstrate continued efforts to achieve liquidity. The investor who purchased a three-year tracker may find themselves indefinitely locked in — not by default, but by a contractual right the issuer exercised lawfully. The prolongation right is an issuer protection mechanism dressed as an operational accommodation.

Side pocket — the illiquid portion of the underlying is ring-fenced into a separate vehicle. The liquid portion is redeemed normally; the investor receives an interest in the side pocket rather than cash for the illiquid element. This may be exercised as an issuer right under the product terms, or as an asset manager discretion where an AMC advisor has been appointed with investment guidelines that include restructuring authority. The valuation of the side pocket interest depends entirely on when and at what price the illiquid position can ultimately be disposed of — potentially years after the original maturity, and at a price materially below the Level 3 carrying value.

Default or restructuring — where the issuer cannot fund the redemption shortfall from its own balance sheet. The outcome depends critically on whether a bondholder representative (Obligationenvertreter under Swiss OR Art. 1157 et seq., or trustee under English law) was appointed at issuance. With a representative: a bondholder meeting can be convened, a restructuring negotiated, and a binding resolution passed by qualified majority. Without one: each investor must act individually — practically ineffective for retail holders and expensive for institutional ones. The absence of a bondholder representative at issuance is a structural gap that reveals itself precisely when collective action is most critical.

C — Open-end vs. defined maturity: the structural honesty question

The maturity scenarios above surface a design question that precedes all of them: is a fixed maturity structurally appropriate for a product linked to a non-tradable underlying?

A defined maturity creates a hard liquidation deadline — an event by which the underlying must be sold or the investor made whole by other means. For a liquid underlying, this is operationally straightforward. For an illiquid underlying whose liquidity cycle may span five to ten years, a three-year product maturity imposes a forced sale event on a timeline the underlying may not accommodate. The prolongation right is a post-hoc patch on this design flaw.

An open-end interval structure — with defined redemption windows, clear mechanics, and explicit disclosure of the conditions under which redemptions may be suspended — is structurally more honest. It aligns the product's liquidity profile with the underlying's actual liquidity cycle. It does not create a maturity event the underlying cannot support. And it is considerably harder to sell. The marketing narrative of a fixed-maturity product — "three years, then you receive your return" — is clean, familiar, and reassuring. The marketing narrative of an interval structure accurately describes the economic reality: the investor may request redemption periodically, subject to available liquidity, and the issuer may suspend if the underlying cannot be sold.

The commercial incentives of the structured products market run systematically against the structurally honest design. The more accurately the product's terms reflect the underlying's illiquidity, the less attractive the product appears in distribution. This is the mechanism by which the gap between implied and actual liquidity persists.

A fixed-maturity product with a prolongation right is, in economic substance, an open-end structure with a more reassuring label. The difference is disclosed in the general conditions, not the headline terms.

05 — The Valuation Gap

Running beneath all seven structural approaches and all three maturity event scenarios is a compounding problem the Guidelines acknowledge but do not resolve: if the underlying does not trade, its value cannot be independently and continuously verified. The product's stated price is derived from a valuation, not from a market. Valuations, unlike market prices, are model-dependent, infrequently updated, and subject to conflicts of interest structurally inherent in the issuer-as-valuer relationship.

Under IFRS 13, fair value measurement of non-tradable assets falls into Level 3: fair value determined using inputs that are not based on observable market data. Level 3 accounting requires a documented valuation methodology, stated assumptions, and sensitivity analysis. It is also the category most susceptible to the lag between model value and exit value. A portfolio of private credit loans, real estate holdings, or collectibles can carry a Level 3 fair value stable through quarterly valuation cycles that declines sharply on any attempt to execute at that value in the actual market. The stability is a feature of the model, not of the underlying.

The Guidelines note "difficulty in accurately determining the value of the underlyings" among the consequences of non-tradability. The acknowledgement is accurate. But the investor told that valuation is difficult has not been told what the valuation would be if someone actually tried to sell. Those two pieces of information are not equivalent — and the distance between them determines the investor's actual exit outcome.

For the issuer, the conflict of interest in Level 3 valuation is structural. An issuer marking its own non-tradable holdings at a value that flatters NAV — through optimistic discount rates, favourable comparable selection, or infrequent model updates — generates a track record that attracts capital and delays the investor's realisation that the return profile includes an exit risk the running valuation does not reflect. This is not necessarily deliberate. It is the natural consequence of a model-dependent process applied by a party with an interest in the outcome. Independent third-party valuation governance is the structural remedy. The Guidelines do not require it.

06 — Complexity, Suitability, and the Liability Chain

The engineering analysis in the preceding sections points to a conclusion that connects the structural problem to the investor protection problem. The chain is direct: illiquid underlying → structural mismatch → complex mechanisms to manage the mismatch → complex product. The complexity is not incidental. It is the necessary consequence of attempting to bridge a gap that cannot be fully bridged. A product that requires understanding of prolongation rights, side pocket mechanics, derivative close-out provisions, Level 3 valuation methodology, and bondholder resolution procedures to assess its full risk profile is not a standard retail product — by the nature of what it is, not by regulatory classification imposed upon it.

This does not lead to categorical exclusion from all non-institutional distribution. A defined allocation within a well-diversified portfolio, managed under an advisory or discretionary mandate, for an investor who has demonstrated the capacity to understand and accept the product's full mechanics and failure conditions — this may represent a legitimate and suitable investment under FinSA's suitability framework. The conditions are specific and demanding. They are unlikely to be met in standard execution-only distribution channels. The standard for what constitutes adequate suitability assessment rises with the product's complexity and the severity of the mismatch between its implied and actual liquidity.

The liability dimension closes the argument from the other direction. An investor who was not adequately informed of the structural mismatch, the prolongation right, the Level 3 valuation methodology, and the conditions under which redemption may be postponed or modified has potential claims under FinSA Art. 72 et seq. — against the manufacturer for product design and disclosure, and against the distributor for suitability assessment. The more complex the product, the harder it is for the distributor to demonstrate that the suitability assessment was adequate, and the harder it is for the manufacturer to demonstrate that the disclosure was comprehensible. Complexity is not only an investor protection problem. It is a manufacturer and distributor liability problem. The commercial incentive to disclose adequately and distribute conservatively is, in this sense, ultimately self-interested.

07 — What the Guidelines Require and What Comes Next

The SSPA Guidelines (May 2025, effective July 1, 2025, mandatory from January 1, 2026 for new issuances) establish three requirements: assess tradability at issuance, label non-tradable-underlying products prominently, and disclose the resulting risks in an understandable manner. These are meaningful. The labelling obligation creates a visible differentiation in offering documents. The risk disclosure obligation, taken seriously, requires the issuer to explain specifically — not generically — how the structural mismatch affects the investor's experience across the range of relevant scenarios.

What the Guidelines leave open is equally important. They do not specify the content of adequate risk disclosure beyond the requirement that it be understandable. They do not address valuation methodology or valuation governance. They do not prescribe which structural approach is appropriate for which type of underlying. They do not establish suitability thresholds or define the investor categories for which a non-tradable underlying product is appropriate. And they apply only to SSPA members and to products issued after the transitional period — leaving an existing book of illiquid-underlying tracker certificates outside the standard's reach.

For a product linked to a non-tradable underlying to be honestly disclosed, the documentation must answer five questions beyond the standard risk factor section. What is the tradability assessment and how was it made? Which structural mechanism manages the mismatch and what are its specific failure conditions? How is the underlying valued, how frequently, and by whom independently? Under what conditions may redemption be postponed or modified? And what investor characteristics would make this purchase inadvisable? An issuer that cannot answer these questions clearly in the product documentation has not completed the work of structuring. It has completed the work of pricing.

The AMC Recommendations, amended April 2025 and under further revision, address the same problem from the AMC angle: advisor standards, strategy transparency, fees, and — in the pending revision — a labelling obligation for AMCs with illiquid underlyings. Together, the two documents represent the SSPA's self-regulatory response to a product category that has grown faster than the standards governing it. The next steps — valuation governance standards, structural approach guidance, suitability thresholds, bondholder representative requirements — remain unaddressed.

Disclosure is not the solution to the liquidity mismatch. It is the discipline that forces the manufacturer to confront whether the product should exist in its current form at all.

08 — A View Across the Border and Outside the Box

The SSPA framework operates within Swiss law — and within the classical structured products universe. Two perspectives beyond both are worth taking. The first looks across the border: the ESMA product governance framework represents the most developed regulatory answer to the same problem, and Swiss issuers distributing into EU member states face it directly. The second looks outside the box entirely: the tokenised product market, where the same structural problems apply in a context that is often less regulated, less transparent, and less protected than anything the SSPA guidelines were designed to address.

Switzerland's FinSA contains appropriateness and suitability requirements for financial service providers (Articles 10–12) that apply at the point of individual client service. What it does not contain is a manufacturer-level product governance obligation — the requirement that the firm creating the product assess whether it should exist in its current form for the target market it is being built for.

Under ESMA's 2023 Guidelines on MiFID II Product Governance Requirements (ESMA35-43-3448, in force October 2023), EU-regulated manufacturers must define both a positive target market and a negative target market — identifying explicitly the categories for whom the product is not appropriate. For products of high complexity or significant risk, ESMA requires a comprehensive evaluation that may result in a drastically reduced positive target market or, in the limit, no compatible target market at all. A manufacturer that reaches the "no compatible retail target market" conclusion may not distribute the product to retail investors.

Liquidity is an explicit criterion. Complexity, risk-reward profile, and liquidity must all be considered — and the 2023 Guidelines specify that more complex underlyings require more granular product-level assessment rather than clustering with comparable liquid products. Separately, ESMA specifies that complex products should not be distributed through non-advised channels without additional safeguards. The practical effect for a structured product on a non-tradable underlying is that retail distribution, if permissible at all, is confined to advised channels with a demonstrated appropriateness assessment.

This framework does not directly apply in Switzerland. But it sets a reference point that every Swiss issuer distributing into EU member states already faces — and that, if applied honestly to the Swiss domestic book, would produce a more demanding standard than the Guidelines currently require. The SSPA is filling a manufacturer-level gap that FinSA does not address. The ESMA framework illustrates how far that filling has yet to go.

The framework is only as effective as the distribution context it operates in. Where a product reaches retail investors through open or broad channels, the negative target market definition carries real weight — it is the primary constraint on who the distributor may approach, and its honest application determines whether a complex or illiquid product reaches investors equipped to hold it. Where distribution is narrow and controlled — think of one asset manager, channelling to its own clients, being booked with two or three custodian banks, and possibly applying a maximum of 150 targeted investors per member state (the private placement threshold under the EU Prospectus Regulation) — the suitability filter is embedded in the relationship itself, and the target market statement in the product documentation is largely confirmatory of a conclusion the distribution chain has already reached. The problem arises in the space between these two poles: products distributed broadly enough that the relationship filter does not operate, but without the discipline in the target market definition that broad distribution requires. It arises equally where the manufacturer sits outside a regulated perimeter altogether — or nominally within one but applying its obligations without the rigour the framework assumes. In either case, the outcome is the same: complexity acknowledged in a risk section but not reflected in a genuinely restrictive target market definition, and an investor protection gap that the framework was designed to close but cannot close on its own.

— and three features of the tokenised product market make the structural problem worse, not better. First, the trading venue infrastructure for security tokens remains underdeveloped. Security tokens — tokens representing financial instruments subject to securities regulation — can only be traded on regulated venues or through regulated intermediaries. Venues such as SIX Digital Exchange in Switzerland and a small number of equivalents in Germany and elsewhere are real and regulated, but thinly traded, narrowly scoped, and not yet interconnected. A security token listed on a regulated DLT venue may formally satisfy the SSPA's tradability test — listed on a regulated venue — while offering none of the substantive liquidity the test is designed to proxy for. The form satisfies the criterion; the order book does not. This creates a direct regulatory arbitrage risk: issuers structuring tokenised products on illiquid underlyings may seek a thin listing specifically to escape the non-tradable labelling obligation, without genuine secondary market development to support it.

Second, the "token as superior instrument" narrative — the claim that tokenisation solves the liquidity problem by making assets transferable on-chain — inverts the structural argument precisely. Transferability on a ledger and tradability in a market are different things. A token representing an illiquid asset is an illiquid asset on a blockchain. Every structural problem examined in this article — valuation opacity, prolongation risk, exit uncertainty, the complexity chain from mismatch to liability — applies unchanged. The ledger records transfers. It does not create buyers.

Third, and most seriously: a significant portion of tokenised product manufacturing and distribution occurs outside regulated perimeters entirely. The SSPA guidelines apply to SSPA members offering products in or from Switzerland. The ESMA framework applies to MiFID II-regulated manufacturers. Offshore issuers, unregulated platforms, and cross-border distribution that falls between jurisdictional frameworks are outside both. For an investor in a tokenised product issued by an entity outside any regulated perimeter, the structural risks described in this article are not mitigated by disclosure requirements or suitability obligations — because none apply. The recourse available in a classical structured product failure is limited. In an unregulated tokenised equivalent, it may be absent.

— The Standard Is a Beginning

The SSPA Guidelines are a genuine step forward. They represent the Swiss structured products industry's formal acknowledgement, in writing, that a category of products had been distributed without adequate differentiation from standard trackers — and that the gap between the product's implied liquidity and the underlying's actual tradability is a structural feature requiring a structural response. The labelling obligation creates a visible signal. The risk disclosure requirement, applied with specificity rather than generality, creates pressure on manufacturers to confront the mechanics of what they have built.

What the Guidelines do not yet do is treat the problem as a design question rather than a disclosure question. The seven structural approaches — from profile matching to synthetic exposure via derivative — are each legitimate engineering responses to a genuine challenge. But the choice between them, and the conditions under which each is appropriate for a given underlying and investor base, is a substantive decision with material consequences for investor outcomes. A label and a risk section do not make that decision. They record it, imperfectly, after the fact.

The steps that follow logically from the Guidelines remain unaddressed: standards for valuation governance and independent appraisal, guidance on structural approach selection by underlying type, suitability thresholds that distinguish advised from non-advised distribution, and bondholder representative requirements that give investors collective recourse when a product reaches its limit. These are not incremental refinements. They are the substance of investor protection for a product category that the Swiss market has embraced at scale. A certificate cannot lend liquidity it does not have. A label and a disclosure requirement do not change that. They are the start of an honest conversation that the market has been having quietly, case by case, for longer than the Guidelines have existed.