BaFin Restricts CFD Trading to Retail Clients 

BaFin issued a General Administrative Act pursuant to section 4b of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) on 8 May 2017. The General Administrative Act restricts the marketing, distribution and sale of financial contracts for difference (CFDs) to retail clients. 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.

According to the General Administrative Act, providers of CFDs with an additional payment obligation have three months from the date of publication of the General Administrative Act to adjust their business models. BaFin states that some providers already offer CFDs without an additional payments obligation or have, because of the planned General Administrative Act, announced that they will in the future offer such products.

Read the News Release (in English)  

Read the General Administrative Act regarding CFDs (in English) 

BaFin Consults Two WpHG Ordinances

BaFin published revised draft versions of the WpHG Employee Notice Ordinance (WpHGMaAnzV) and the Financial Services Audit Ordinance (WpDPV) on 29 May 2017. 

The amendments to the WpHG Employee Notice Ordinance relate to the expertise and experience that employees of German investment services providers who provide investment advice must have in respect of financial instruments and structured deposits. The expertise requirements for sales employees who provide customer information on these products or on financial services and investment services are also specified in the WpHGMaAnzV

The amended WpDPV further specifies the audit program as well as the requirements for the auditor and sets out guidelines for the preparation of the audit report and the questionnaire. It also contains rules for the submission of documents to BaFin as well as the retention periods. The obligations to be audited derive from the Markets in Financial Instruments Regulation (MiFIR), the Implementing Regulation on the Financial Markets Directive (MiFID II), the MiFIR Implementing Regulation and other delegated regulations.

Comments can be submitted to BaFin until 19 June 2017.

Read the revised drafts (in German)

German Investment Fund Association Publishes Updated Template Fund Rules for Retail Securities Funds 

The German Investment Fund Association (Deutscher Fondsverband – BVI) has published updated template fund rules (Anlagebedingungen) for retail securities funds (Wertpapier-Publikumsfonds) which were coordinated with the German regulator BaFin. The updated templates include updates deriving from the updated Investment Tax Act which will enter into force in 2018 and take into account the latest guidance from the German Federal Ministry of Finance.

Read the updated template fund rules (in German)

Latest Investment Fund Statistics for Germany 

The German Investment Fund Association, BVI, has issued its latest investment statistics report dated March 2017, 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.

Access the latest statistics