BaFin Publishes Circular on Solvency II
Bafin published a revised draft circular on 7 December 2016 addressing Solvency II entities regulated by the BaFin which will enter into force on 1 January 2018. The draft circular is designed to replace the circular concerning the duty to establish and maintain a schedule of coveredassets and to keep certain covered assets in safe custody. The new circular will implement and provide interpretation on some of the provisions in the Insurance Supervision Act (Versicherungsaufsichtsgesetz- VAG) which have become effective on 1 January 2016.
The deadline for the consultation period of the revised guidance will end on 4 January 2017.
Read the draft circular (in German).
BaFin Plans to Limit CFD Trading
BaFin has published a press release and a draft General Administrative Act on 8 December 2016 regarding the limitation of the marketing, distribution and sale of financial contracts for difference (CFDs) according to which the marketing, distribution and sale of CFD’s to retail clients shall be prohibited. Since CFD’s typically create additional payments obligations, BaFin has investor protection concerns in relation to these CFD’s. BaFin is of the opinion that the investor’s risk of loss cannot be limited effectively through the margin call process or through stop-loss orders since price fluctuations of an underlying can be so significant within a short period of time that the CFD provider will not have sufficient time to ask the investor for an additional payment in addition to the margin they have deposited. If the position is then forcibly closed, this can result in significant losses for the investors. Stop-Loss orders are in BaFin’s view also not an efficient way to protect investors from significant losses since the next available price at which such an order is normally executed may differ significantly from the price originally strived for. The difference to be paid by the investor can then amount to multiples of the margin they have put down.
The European Securities and Markets Authority (ESMA) also issued an investor warning on CFDs in July 2016.
Read a specialist article published by BaFin on the subject (in German).
BaFin Consults Draft "MaComp" Covering Rules of Conduct, Organization and Transparency for Investment Services Enterprises
BaFin has published a draft of the revised “MaComp” circular on 16 November 2016 for further consultation. The MaComp (Governing Rules of Conduct, Organization and Transparency pursuant to Sections 31 et seq. of the Securities Trading Act (Wertpapierhandelsgesetz – WpHG) for Investment Services Enterprises) comprise all requirements concerning the conduct of business rules set out in sections 31 et seq. of the WpHG. The MaComp has been revised to reflect the entering into force of the Market Abuse Regulation (EU) no. 595/2014 which governs certain aspects with regard to the analysis of financial instruments. Accordingly, these aspects previously governed in BT 5 of the MaComp will be repealed. Other changes include clarifications regarding the responsibility of investment services enterprises who make available to clients information from third-party sources. The deadline for the consultation period of the revised version will end on 14 December 2016.
Read a specialist article published by BaFin on the subject (in German).
Latest Investment Fund Statistics for Germany
The German Investment Fund Association BVI issued its latest investment statistics in November 2016 providing an overview of the net assets and net sales within the German investment fund and asset management markets. The statistics are broken down by asset class and provider. They provide information on net assets and net inflows of investment funds and assets outside investment funds.
View the statistics in full.
