Financial Regulatory News
Financial Regulatory News

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BaFin

BaFin Declines to Act Against PFOFs (For Now)

The Federal Financial Supervisory Authority (BaFin) will, for now, not take action against payments by third parties to investment firms (Wertpapierfirmen) for forwarding client orders (known as payment for order flow, or PFOF).

In an announcement dated 22 March 2024 BaFin stated that, should investment firms violate the PFOF prohibition with domestic clients, it will refrain from taking measures or imposing sanctions until the completion of the national legislative process in Germany. The PFOF prohibition, as contained in the amended version of the Regulation (EU) No. 600/2014 of the European Parliament and of the Council (MiFIR), stipulates that investment firms [...]

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Update for securities institutions: German Securities Institutions Owner Control Ordi-nance published

On January 15, 2024, the German Securities Institutions Owner Control Ordinance was published in the Federal Law Gazette and thus entered into force today, January 16, 2024.

Owner control procedures for securities institutions

The Securities Institutions Owner Control Ordinance regulates the material and formal requirements for the acquisition of a significant shareholding in a regulated securities institution (so-called owner control procedure).

A significant or qualified shareholding is defined as the direct or indirect holding of shares in a company that represents at least 10% of the capital or voting rights of this company or that otherwise enables the exercise of [...]

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Amendment of the Owner Control Regulation

On December 28, 2022, the amended “Regulation on Notifications in Accordance with Section 2c of the German Banking Act (Kreditwesengesetz – KWG) and Section 104 of the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG)”, the Owner Control Regulation (Inhaberkontrollverordnung – InhKontrollV, also referred to as Holder Control Regulation by BaFin), became effective. The amendment expands the scope of the documents and declarations to be submitted, but at the same time contains partial relief for the party subject to the notification requirement.

Consideration of the changes to the KWG and the VAG

The amendments to the InhKontrollV take into account the [...]

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BaFin considers dark patterns in trading apps and trading portals to be unlawful

On November 21, 2022, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin“) clarified in a statement that investment firms are not allowed to use dark patterns in trading apps or trading portals. Against this background, BaFin also published two new FAQs on the conduct of business rules for investment firms.

In BaFin’s opinion, dark patterns in digital decision worlds (“choice architecture“) violate the ban of misleading information and the principle of fairness and are therefore unlawful.

What are dark patterns?

Dark patterns are when individual buttons in apps or on websites have a significantly lower [...]

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ESG risks & Co. in the 7th MaRisk update

On September 26, 2022, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin“) published an amended draft of its circular “Minimum Requirements for Risk Management” (Mindestanforderungen an das Risikomanagement – “MaRisk“), which is now open for consultation.

MaRisk codifies BaFin’s administrative practice on risk management for German banks, particularly with regard to business organization and outsourcing, and in doing so specifies the statutory requirements of Section 25a of the German Banking Act (Kreditwesengesetz – „KWG“).

The draft of the 7th MaRisk amendment includes, among other things




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BaFin on the new sustainability exploration in investment advice and financial portfolio management

In a publication dated August 3, 2022, BaFin referred to the now applicable obligation of investment advisors and financial portfolio managers to conduct customer exploration with regard to the sustainability preferences of customers.

  • Customer exploration now also includes sustainability factors, which is why the suitability check and declaration is expanded to include the aspect of the customer’s sustainability preference.
  • The background is the Delegated Regulation (EU) 2021/1253 of the European Commission, which regulates the inclusion of sustainability factors, risks and preferences in certain organizational requirements and conditions for the operation of securities firms.
  • [...]

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