20.01.2020 | KPMG Law Insights

Investment | Law | Compact – Issue 3/2017

Dear Readers,

the German implementation of MiFID2 is progressing. A hearing of experts on the government draft of the 2nd FiMaNoG was held on March 8, 2017. The national implementation must come into force in the middle of the year, and the new regulations must be applied at the beginning of 2018. We take this as an opportunity to revisit an important topic of the Financial Markets Directive in today’s issue.

The International Organization of Securities Commissions (IOSCO) has published a report on the development of funds that invest in or make loans. In it, it also comments on whether further regulatory action in this area is appropriate.

In this context, we would like to make a note on our own behalf: In the essay “Unsecuritized loan receivables – an attractive asset class since the KAGB amendment?” (Recht der Finanzinstrumente, issue 1/2017, p. 31 et seq., also available online), we examined the current legal situation regarding investment in loans as it applies following the insertion of the new section 20 para. 9 KAGB constitutes. In doing so, we also address some practical cases.

With warm regards

Henning Brockhaus


IOSCO report on investment in loans by investment funds

The International Organization of Securities Commissions (IOSCO) published the report ” Findings of the Survey on Loan Funds” on February 20. In it, she discusses the development of the loan market for investment assets in various jurisdictions.

A global view of the issue shows that investing in loans is a relatively new asset class at an early stage of development and with a limited market. Nevertheless, interest in this has increased in Europe in recent years. Luxembourg and the United Kingdom are the main players here.

The IOCSO states that many countries have identified liquidity risk, credit risk, and systemic risk as potential risks and focus areas. There is therefore a general consensus that investor protection requires special attention. Moreover, all countries consider fund lending as a so-called “shadow banking activity” and emphasize the importance of its monitoring.

The International Organization of Securities Commissions believes that further analysis and supervisory activity with respect to loans may be warranted if this asset class continues to grow in importance for investment funds. This applies in particular with regard to possible regulatory arbitrage.

Notwithstanding this development, many countries consider their general rules for such funds and, in particular, the implemented risk management requirements to be sufficient. Therefore, IOSCO currently sees no need for further regulatory action, but will continue to monitor the issue.

The IOSCO report can be found here.


MiFID2 implementation into German law: What’s next for commission-based sales?

The implementation of the rules of the new Financial Markets Directive (MiFID2) including implementing acts (in particular Delegated Directive of April 7, 2016, DelRL) is progressing.

Commissions still under discussion

On March 8, 2017, a hearing of experts was held on the government draft of the 2nd FiMaNoG of December 21, 2016 (RegE). In addition to several industry and association representatives, the Federation of German Consumer Organizations (vzbv) was one of the participants. In its published written statement, the vzbv advocated not only individual adjustments to the provisions of the RegE, but also a general and final “move away from commission-based advice”. He reasoned that the “evidence against commission-based counseling … is clear.” This “system change” should be anchored in the 2nd FiMaNoG, albeit with a transition period of five years.

Current status of implementation

This may be taken as an opportunity to look again at the current status of MiFID2 implementation in Germany as far as incentives (“gratuities”) originating from product suppliers are concerned, especially in the form of commissions for distributors (investment advisors, investment intermediaries, etc.). As of the beginning of 2018, independent (fee-based) investment advisors and financial portfolio managers will no longer be allowed to accept and retain any corresponding monetary incentives. Non-independent investment advisors and intermediaries active in advice-free sales will only be allowed to continue collecting such payments, which capital management companies, for example, make for fund sales, if they meet the stricter requirements for the necessary quality improvement. Any monetary incentives must be designed to improve the quality of the service in question for the customer.

DelRL gives examples of this (broader product range, ongoing offerings, provision of additional instruments/tools, or similar). The BMF had initially taken up this in its draft bill of the 2nd FiMaNoG of September 29, 2016 (RefE) and incorporated it into a proposal for a revised WpDVerOV. On this occasion, another example was added that is not provided for in the DelRL: the provision of a widespread regional branch network that ensures on-site availability of qualified consultants even in rural regions. The RegE no longer contains the revised WpDVerOV. It therefore remains to be seen to what extent the BMF will make changes in the further course of the legislative process, or whether the content will remain as it was in the RefE.

The countdown is on

Either way, the countdown for a legally compliant and sales-supporting implementation is on. The German implementation rules will be available by the beginning of July 2016. At this point, at the latest, it will be possible to see which commission-based product partnerships and sales models need to be put to the test, and at which point considerations for alternative approaches are unavoidable.

All of this will then have to be implemented within a short period of time, as there are only around six months left for the necessary further steps and course-setting. In this context, we consider it particularly critical for success to enter into substantial and strategic dialogs with key product and sales partners in a well-prepared manner.

From the point of view of the capital management companies, this is all the more important as it is well known that the rules applicable to them themselves also provide for corresponding restrictions on incentives and payments made by them (see Art. 24 (1) of AIFMD Level 2 Regulation No. 231/2013). The interpretation of the term “quality enhancement” in Art. 24 AIFMD Level 2 Regulation will probably also have to be based on the above examples in the future.

We will be happy to support you in implementing the necessary measures, both from a regulatory and a sales conceptual perspective.
Please contact: Henning Brockhaus(


KPMG Law assists capital management companies with changes to investment conditions

The Investment Tax Reform Act (InvStRefG), which comes into force at the beginning of January 2018, fundamentally revises investment taxation.

As a result, extensive adjustments to the current investment conditions of mutual and special funds will also be necessary in the coming months. As far as mutual funds are concerned, these amendments also require the approval of BaFin.

We support capital management companies in projects to adapt the investment conditions of their investment assets. In doing so, we tailor our services according to the respective individual requirements and needs.

Please contact: Henning Brockhaus(


EU Commission accepts amended delegated regulation supplementing the PRIIPs Regulation

On March 8, 2017, the European Commission adopted the Delegated Regulation supplementing the PRIIPs Regulation and submitted it to the EU Parliament and the EU Council for further consideration.

A three-month period is now running from March 8, 2017, during which Parliament and the Council can speak out for or against the draft. After the first attempt failed, approval is now expected.

The delegated regulation can be found here.

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