UPDATE 3-New Swiss bonus rules target big banks, insurers

* New rules only for seven biggest banks, five top insurers

* No cap on bonuses, but stricter links to performance

* Significant portion of bonuses will have to be deferred

* Banking lobby says pleased rules won't hit small firms

* Insurance lobby sees possible competitive disadvantage

(Adds comments from banking, insurance association)

By Lisa Jucca

ZURICH, Nov 11 (Reuters) - Switzerland's largest banks and insurers will have to defer the bulk of managers' bonuses and better match pay to performance under new rules aimed at curbing risky investments.

Swiss financial regulator FINMA had planned to impose the rules on the vast majority of the financial sector, but watered down its original proposals after industry lobbies said it could harm smaller firms. [ID:nLP442727]