Regulatory Alerts2019-03-21 | Circular 5/2018Circular 5/2018 on Minimum Requirements for the Compliance Function and Rules of Conduct under Sections 63ff. of the Securities Trading Act
The Federal Financial Supervisory Authority (BaFin) issued Circular 5/2018 to establish minimum requirements for the compliance function and detailed organizational, conduct, and transparency rules for German investment services enterprises under Sections 63ff. of the Securities Trading Act. The regulation mandates robust compliance structures with clearly defined tasks, independence, and adequate resources while setting precise standards for personal transaction monitoring, fair client information, best execution, product governance, and remuneration systems. Applying proportionally to enterprises of varying sizes, the framework strengthens investor protection, mitigates regulatory and reputational risks, and provides a flexible implementation path for both large institutions and smaller firms.