BaFin published on its website on 4 March 2016 that it is investigating the extent to which credit-linked notes are being actively sold to retail clients and whether such clients receive sufficient explanation of the risks involved. To this end, BaFin sent a market-wide survey to issuers of credit-linked notes. Among other things, the survey covers the scope of the credit-linked notes issued, the size of the average coupon and the origin of the credit risks used in the structuring. BaFin has also written to around 100 companies selected as an initial sample and asked them about the sale of these products. BaFin expects to complete the investigation by the end of 2016.
BaFin is also investigating so called “closet index tracker” funds, i.e., a fund whose fund management claims in the fund’s investor information documentation and fund rules to manage the fund actively while the fund is, in fact, staying very close to a benchmark and therefore implementing an investment strategy which requires less input from the investment manager. According to market sources, Bafin has written 100 fund managers in Germany in order to investigate the matter.