Regulatory Alerts2016-12-14 | Interpretative Guidance of the German Bank Separation Act - commentsInterpretative Guidance on the German Bank Separation Act
BaFin and the Deutsche Bundesbank published updated interpretative guidance on Article 2 of the German Bank Separation Act to ring-fence large institutions' core deposit and credit business from risky trading activities. Affected CRR credit institutions must conduct a risk analysis within six months to identify prohibited proprietary, lending, guarantee, and high-frequency trading activities, then discontinue or transfer them to an independent financial trading institution within twelve months. The guidance mandates clear documentation and due care in assessing borderline cases to avoid criminal prosecution or fines, while granting BaFin case-by-case authority to order the cessation of specific market-making transactions.
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