Regulators

German Federal Financial Supervisory Authority (BaFin)

On May 1, 2002, Deutsche Bundesbank merged with insurance regulators and securities regulators to become the German Federal Financial Supervisory Authority (BaFin), a ...

Organization Profile

Type of organization: government agency
Organization introduction:
On May 1, 2002, Germany merged the Deutsche Bundesbank, insurance regulators and securities regulators to form a unified regulatory organization, the German Federal Financial Supervisory Authority (BaFin).
The Federal Financial Supervisory Authority (BaFin) is a federal agency governed by public law by a minister attached to the Federal Ministry of Finance. have legal character. The Federal Financial Supervisory Authority (BaFin) supervises more than 2,700 banks, more than 800 financial services institutions and more than 700 insurance institutions.
Institutional functions:
1. Review of market access;
2. In the inspection of the company's daily operations, if the company has violated regulations, the Federal Financial Supervisory Authority can directly punish the found violations in accordance with the law.
The methods of punishment are as follows: 1. Fines; 2. Prosecution; 3. Revocation of the qualifications of responsible members of the board of directors; 4. Revocation of business licenses.
3. Protection of consumer rights

Licence application

Application requirements:
1. At least 2 members of management shareholders are required to have certain theoretical knowledge and practical experience;
2. Suitability requirements for holders of a large number of shares;
3. Submit a business plan and establish an internal control system;
4. Risk control is conducted at least once a year, and audits and records are maintained for at least 6 years
Minimum capital requirement:
German BaFin will make different requirements for the minimum registered capital of the company according to the business type of the financial company, which is generally between 50,000 euros and 730,000 euros.
1. The minimum capital requirement for securities trading banks is 730,000 euros;
2. The minimum capital requirement for deposit and withdrawal credit institutions is 5 million euros;
3. Investment advisors, investment brokers, contract brokers and portfolio managers, as well as companies that operate multilateral trading facilities, fund securities organizations and other companies that cannot trade their own accounts, the minimum capital requirement is 50,000 euros;
Overall:
(1) Except for special circumstances, the initial capital of all investment companies shall not be less than 730,000 euros;
(2) The initial capital of the investment company (which can hold client funds and trade its own account) shall not be less than 125,000 euros;
(3) The minimum initial capital of investment companies in member states (cannot hold client funds and trade their own accounts) is 50,000 euros.

Scope of supervision

Credit financial institutions, insurance businesses, pension funds, payment companies, German management companies, securities exchanges, deposit guarantee schemes, etc.

Regulatory Rules

Leverage Limits:
Following the EU announcement on March 27, the leverage needs to be set between 2:1 and 30:1.
Negative Balance Protection:
BaFin requires brokers to provide negative balance protection for retail clients, and all leveraged trading losses below zero balance are not borne by traders, but by brokers.
Segregated Accounts:
BaFin requires brokers to provide clients with segregated trust accounts for funds.
(1) The investment service enterprise shall not unreasonably delay the segregation of the trust account of client funds.
(2) The investment service enterprise is obliged to provide each client with an annual report on the funds in its trust account and financial instruments.
Periodic report:
(1) Submit self-owned asset request report and financial information report;
(2) Submit information reports on company subscriptions, securities lending, and all other forms of assets;
(3) Submit asset disclosure report
In summary, there are transaction reports, audit reports, anti-money laundering reports, net worth reports, securities lending and other reports required

Regulatory Inquiries

1. Open the official website of BaFin in Germany, https://www.bafin.de
2. Click "Banking and Financial Service Providers" under "Supervision" in the navigation bar, as shown in the screenshot:
3. German BaFin regulated brokers are displayed in a list. Click "List of Financial Service Providers" to download.
List query:
Regulated Financial Service Providers: (German only)
https://www.bafin.de/SharedDocs/Downloads/DE/Liste/Unternehmensdatenbank/dl_li_fidi_zugel_gesamt.xls?__blob=publicationFile&v=11
List of Regulated Financial Leasing/Factoring Institutions: (German only)
https://www.bafin.de/SharedDocs/Downloads/DE/Liste/Unternehmensdatenbank/dl_li_fidi_leas_fac.xls?__blob=publicationFile&v=13
If you need to inquire about the specific information of a company and its business activities, you can directly enter https://portal.mvp.bafin.de/database/InstInfo/
The steps are as follows:
Step 1 Enter the official website of BaFin in Germany: https://www.bafin.de, find "Publications and Databases", and enter the following "Databases";
Step 2 Click to enter "Company Database" under "Database", and then enter "Company Database Query Link" on the right;
Step 3 Enter the company name on the left to search, and then click the corresponding company name on the right to query the company information; for example: query the "GKFX" company.
Step 4 We can check the company name, category, address, code, effective date and business activities and other information; in the business activity form, only the "√" mark indicates that the company can provide corresponding services.
Note: Only if the corresponding position of C9 (financial CFDs) or B4 (investment-related foreign exchange services) is marked with a "√", it means that the company can provide leveraged foreign exchange service activities.

Regulatory complaints

Appeal rights:
1. Complaints should be submitted in writing
2. After receiving the complaint, BaFin will first review whether your information, evidence and documents are sufficient
3. After completing the required information, BaFin will contact the complained company and ask for a detailed explanation and solution
4. If the financial institution has not violated any regulations, BaFin will truthfully inform
5. No matter what the result is, we will give you the final notice in writing
6. Securities investment complaints are special, BaFin has no right to help you claim, and its function will help you to investigate. If the amount of compensation is involved, it is suggested that you can go to court procedures
7. Please provide the following information in the complaint letter: your name and address, the name and address of the company complaining Financial institutions, please attach the trading account and product type; if it involves securities purchases, please inform the securities code.
Deposit guarantee mechanism:
Germany's BaFin is responsible for overseeing the statutory compensation scheme and the bank guarantee scheme of the bank's securities trading department, which every regulated platform player must join in order to protect the deposits of clients of these institutions. According to the provisions of the compensation plan, the maximum compensation is 100,000 euros, that is, the affected investors can receive compensation up to 100,000 euros.
1. On July 2, 2014, the EU Deposit Protection Mechanism Directive came into force. Germany's BaFin official website shows that the "EU Deposit Protection Mechanism Directive" requires all credit institutions to join a certified deposit guarantee scheme.
2. At the same time, the mechanism also clarifies the investor compensation plan. Member states have until December 31, 2023, at the latest, to reduce the fixed period for compensatory events from the current 20 days to seven days.
The guarantee mechanism stipulates that all depositors, including large companies, are entitled to compensation of up to 100,000 euros. However, investors in the Institutional Protection Scheme, such as savings banks, state banks, regional building societies and cooperative banks, already fall under the independent guarantee scheme (ie Institutional Protection Scheme) and are not part of the guarantee scheme.
3. In July 2015, the EU Deposit Protection Mechanism Directive was applied to German law. The German Deposit Protection and Investor Compensation Act and all the regulatory provisions applying it must be applied to or added to the new protection mechanism.

Penalties

BaFin can issue warnings, fines, suspensions, prosecutions and other penalties for violations of regulated companies.
If necessary, BaFin has the right to temporarily prohibit market transactions of single or multiple financial instruments, restrict or prohibit market participation, etc.

Related Links

Deutsche Bundesbank: http://www.bundesbank.de/

Contact information

Email: [email protected]/[email protected]
Tel: 49 (0)228 299 70 299 (weekdays 8:00-18:00)
Fax: 49 0228 4108 777 4
Address: Graurheindorfer Straße 108, 53117 Bonn, Germany

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