Changes regarding reporting obligations pursuant to the German Foreign Trade and Payments Regulation (AWV)
Within the scope of the establishment of credit or financial institutions external sector statistics reporting is still to be observed. This topic is subject to substantial changes from July 2013 on.
From this date on the reports could only be filed electronically. Apart from that, the content of the reporting will be extended in order to meet the increased needs for information on both, national and international level. Additionally, there will be changes with respect to the persons subject to external sector statistics reporting obligations.
Extended Reporting Requirements based on the ‘Financial Information Regulation’
Within the context of the establishment of a credit or financial institution the proper compliance with the German reporting regulations has to derive already from the respective application documentation. That means, one should deal with the German reporting duties at a very early stage. Even EU-Branches pursuant to Sect. 53b German Banking Act should be aware of German reporting requirements since they are also obligated to submit regulatory reports to a certain extent.
While the last post addressed the issue of capital requirements (see below), the present blog deals with the question to which extent an AIFM may outsource functions already in the course of the licensing procedure (and later when conducting the business as licensed entity).
The outsourcing or delegating of tasks by an AIFM is possible as far as the outsourcing structure can be justified on objective grounds and certain other conditions, such as a written contract, are fulfilled.
Currently the entry requirements for suppliers from third countries such as Switzerland are set in the framework of national legislation, leading to national differences concerning the necessary prerequisites.
As part of the revision of MiFID in the future also market access for providers of investment services from third countries should be regulated consistently across the EU. Sales to retail clients, including retail clients who have requested to be treated as professionals shall be possible only if a branch in the EU has been established. Therefore, cross-border sales to retail clients will not be possible any more.
Funding required for running the business
As already posted on June 2012 (see below), from July 2013 on all collective investment schemes, which are not already covered by the UCITS Directive [Directive for the regulation of collective investment undertakings; Directive 2009/65/EC] are regulated by the AIFMD. Therefore fund managers of so-called “alternative” funds, such as private equity funds or hedge funds generally are required to obtain a license for their activities.
There are numerous requirements that have to be met in order to obtain an AIFM-license by the Federal Financial Supervisory Authority (BaFin). One of these conditions is the availability of adequate capital.
In the near future, collective investment models that do not fall under the UCITS Directive, will be regulated indirectly by the AIFMD. The AIFMD regulates fund managers directly, and thus indirectly also their products, and will be applied from 22 July 2013. In the future, it will apply basically to so-called “alternative” fund managers, such as managers of closed end funds, private equity or non-UCITS investment funds, and on account of European provisions a license will be required.
The German implementation is currently in preparation. According to reports, the current investment law is turned upside down and will be transformed in a so called “Capital Investment Code”. The release of the draft is expected daily.
I am proud to announce that the latest, the 3rd, edition of "Banking Business in Germany" is now available. Also the new edition was developed in close cooperation between the Association of Foreign Banks in Germany (Verband der Auslandsbanken in Deutschland e.V.) and PwC and, like the former editions, is endorsed by the State-Government of Hesse.
The book's subtitle tries to explain its ambition in one short sentence:
"A practical guide for foreign banks establishing a subsidiary or a branch in Germany"
On 20 October 2011, a draft of the revised Markets in Financial Instruments Directive (MiFID) flanked by the draft of a new Market in Financial Instruments regulation (MiFIR) was published by the EU Commission. The two drafts are hereinafter referred to collectively as "MiFID II". The revision of the existing MiFID is part of reforms designed after the financial crisis to create a safer and sounder financial system.
MiFID II is expected to expand the existing licensing obligation to a larger number of enterprises.
An increasing number of companies will be obliged to submit emission allowances in the future. More companies will participate in trading for the purpose of covering and securing their need for emission allowances. However, certain arrangements of such transactions can trigger a license requirement of the involved entity. Under certain circumstances, the application for a banking license for trading in emission allowances may be required.
The German Supervisory Authority has clarified the scope of the license requirements in a recent guidance notice. By doing so, it aligned its orientation in this matter with the given legal status in Europe.