Key regulatory developments in Germany

Federal Financial Supervision Authority (BaFin)

August 21, 2023

BaFin updates FAQ on mandatory additional training for employees in the insurance industry

BaFin has consulted the new FAQs, aimed at insurance intermediaries, insurance advisors and employees working in sales, with the chambers of industry and commerce (DIHK and IHK). Changes include, for example, advice on student trainees, training in the areas of customer advice and legal bases as well as creditability of activities as a lecturer or tutor.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

August 3, 2023

BaFin publishes administrative act on remuneration notifications for investment firms

Since June 2021, disclosure obligations of investment firms regarding remuneration are regulated in the Investment Firm Directive (IFD) and are implemented in Germany in the Investment Firm Act (WpIG). BaFin’s administrative act now establishes new procedures for notifications on the annual reporting of data on employees who are income millionaires and must be reported to the Deutsche Bundesbank under the IFD. The administrative act was necessary to enable BaFin’s own reporting obligations compared to those of the European Banking Authority, which had previously published a set of corresponding guidelines.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

August 1, 2023

Silicon Valley Bank: BaFin recognizes measures taken by US authorities

The US Federal Deposit Insurance Corporation (FDIC) has requested BaFin to recognize the measures taken as a result of the Silicon Valley Bank default so that they would also be fully effective in Germany. In particular, the FDIC has now sold parts of the not yet liquidated German branch of Silicon Valley Bank to Bootstrap Europe III S.C.Sp., Luxembourg. The remaining positions will either be resold by the FDIC in the future or liquidated by the FDIC itself. As a foreign authority, the FDIC cannot issue sovereign orders in Germany, but BaFin has now complied with the FDIC’s request by way of administrative assistance and published a corresponding administrative act.

More information (in German) is available here, and (in English) here.

Federal Financial Supervision Authority (BaFin)

July 31 and July 28, 2023

Central counterparties: BaFin applies various new ESMA Guidelines

BaFin now applies the following ESMA Guidelines on central counterparties (CCPs): (i) to restrictions following a non-default event, (ii) to the consistent application of triggers for the use of early intervention measures, (iii) to the application of circumstances under which a CCP is deemed to be failing or likely to fail and (iv) on the methodology to be used by resolution authorities for determining the valuation of contracts prior to their termination as referred to in Article 29(1) of the Central Counterparty Recovery and Resolution Regulation (CCPRRR). Overall, ESMA aims to promote convergent supervisory and resolution practices within the European supervisory system through these guidelines.

More information (in German) is available here, here, here and here.

Federal Financial Supervision Authority (BaFin)

July 17, 2023

BaFin updates circular on company valuation in the event of resolution (MaAbwicklungsbewertung)

In the circular, BaFin specifies what information institutions are obliged to provide for the wind-down valuation and the minimum requirements for information systems. Institutions supervised by BaFin as resolution authority must be able to provide all relevant internal and external standard reports on the company valuation within 24 hours in a virtual data room upon BaFin’s request and have suitable systems and processes in place for this purpose. BaFin also specifies which specific data it requires for the wind-down valuation, which must be made available in the data room within 72 hours. In addition, the amended circular requires institution to establish a structured question and answer process.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

July 12, 2023

EU Prospectus Regulation: BaFin welcomes ESMA statement on ESG disclosure

On July 11, 2023, ESMA published a statement on sustainability disclosure in prospectuses (see above). The statement relates to prospectuses for non-equity securities, in particular green bonds, and equities. ESMA is thus ensuring that the EU Prospectus Regulation is applied uniformly throughout Europe. BaFin expects issuers to also take the ESMA statement into account when drawing up prospectuses and will take the statement into account in its own supervisory practice in order to facilitate an efficient prospectus review process. This applies in particular to the information on the sustainability profile of the issuers or on financial products that they market as sustainable.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

July 11, 2023

SFDR: BaFin expands Q&As and provides detailed information about RTS for SFDR

According to BaFin, the Sustainable Finance Disclosure Regulation (SFDR) contains undefined legal terms whose interpretation causes difficulties for financial market participants. Some questions on the SFDR have been already answered by the EU Commission. Others, regarding the Regulatory Technical Standards (RTS) have been answered by the joint committee of the ESAs. BaFin is continuing to address the remaining questions of application and has added to already published Q&As the answers for product-related templates from Annexes II and III of the RTS along with detailed guidance on these templates.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

July 5, 2023

BaFin publishes its sustainable finance strategy

BaFin sees climate change and the environment, social issues and good corporate governance as increasingly important topics for the financial sector as well as for consumers. Therefore, BaFin outlined a new focus for its supervisory activities in its Sustainable Finance Strategy. For example, the authority intends to focus on risk-oriented and practical regulation, more reliable data on financial climate risks, and appropriate management of environment-related risks. BaFin also plans to focus on combating greenwashing and generating and sharing knowledge in open dialogs.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

July 4, 2023

Supervisory Notice: Effects of the ECJ Ruling on Intermediary Status for Group Insurance Policies

BaFin, together with the Chambers of Industry and Commerce (DIHK and IHK), have published a supervisory notice on how the September 2022 ruling by the European Court of Justice (ECJ) (C-633/20) affects the intermediary status of policyholders of group insurance contracts. The notice specifically addresses cases in which associations or employers can be qualified as an insurance intermediary. BaFin and IHK established three core criteria for the classification as intermediary in their future supervisory practice: (i) the intermediation of insurances is the primary purpose of the activity, performed with economic interest and profit-making intent, (ii) membership in the group insurance is voluntary and (iii) insured individuals must have the right to make claims directly against the insurance undertaking.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

June 30, 2023

BaFin updates circular on MaComp

MaComp contains minimum requirements for the compliance function and other conduct, organization, and transparency obligations for investment service providers. The update was necessary after ESMA issued new guidance on some aspects of MiFID II requirements on appropriateness and execution-only business. The content of ESMA’s guidance was incorporated unchanged into MaComp and includes, among other things, requirements on how investment service providers must inform their clients about the appropriateness test and what data they must obtain about their knowledge and experience.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

June 29, 2023

BaFin has updated its Minimum Requirements for Risk Management in Credit Institutions (MaRisk)

In this seventh MaRisk update, BaFin has taken into account the EBA’s new guidelines on lending and credit monitoring and also addressed new aspects. Notable changes include (i) requirements for the handling of risk management by credit institutions with their real estate, (ii) the facilitations for securities trading in the home office (originally issued due to the COVID-19 pandemic and valid as long as no deviating standards are adopted internationally) and (iii) amendments and clarifications of requirements on the topic of sustainability so that institutions measure their sustainability risks using scientifically based scenarios.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

June 20, 2023

BaFin publishes administrative acts on the extension of post-trade transparency exceptions

BaFin continues to allow transactions in financial instruments to be published later than generally required by the European Markets in Financial Instruments Regulation (MiFIR). Under MiFIR, information on transactions in financial instruments on a trading venue must generally be published in real time or as quickly as technically possible. The same applies to over the counter (OTC) transactions in financial instruments traded on a trading venue. With the publication of three separate administrative acts, BaFin continues to make use of possible exceptions under MIFIR.

More information (in German) is available here.