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In parallel with the entry into force of the new EU Regulation on Prudential Requirements for Investment Firms (IFR), the new law implementing Directive (EU) 2019/2034 on the supervision of investment firms (Wertpapierinstitutsgesetz, hereinafter WpIG) will enter into force in Germany on 26 June 2021, following the passing of the latest draft by the federal parliament on 15 April 2021.

Authors: Simon G. Grieser Anselm Reinertshofer Irmela Dölle

Institutions within scope of WpIG

The IFR and WpIG form an overall package for the future regulation of the activities of small and medium-sized securities institutions. For large securities institutions and CRR credit institutions, on the other hand, the regulations of the German Banking Act (Kreditwesengesetz, hereinafter KWG) and the Capital Requirements Regulation (EU) 575/2013 (CRR), which also apply to banks, remain largely applicable. The following guidelines can be used to determine whether an entity will continue to fall within the scope of the KWG and so not be deemed to be a securities institution within the meaning of the WpIG:

  • CRR credit institutions: systemically important firms which conduct issuing business or proprietary trading and have a balance sheet total of at least €30 billion.
  • Large securities institutions: not CRR credit institutions, but due to their size or bank-like business activities they remain subject to the CRR.
  • Conduct of business supervision remains unchanged under the relevant stipulations of the Securities Trading Act (Wertpapierhandelsgesetz) and the MiFID implementing acts.
    The new regime for small and medium-sized investment institutions

The new regime for small and medium-sized investment institutions

General

The IFR regulates, among other things, capital requirements, concentration risk requirements, liquidity requirements, reporting requirements and disclosure requirements, whereas the WpIG mainly deals with solvency supervision and supervisory powers, the licensing procedure, requirements for managers and administrative or supervisory bodies as well as holders of significant participations, and requirements for internal corporate governance.