Topic Consumer protection Hearing: General Administrative Act pursuant to section 4b (1) of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) regarding credit-linked notes
GZ: VBS 7-Wp 5427-2016/0019
Document number: 2016/1332459
Hearing: General Administrative Act issued by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) regarding credit-linked notes
Receipt by BaFin: 2 September 2016
Dear Sir or Madam,
I intend to order the measure detailed in the draft below pursuant to section 4b of the WpHG. Before I do so, I hereby give you the opportunity pursuant to section 28 of the German Administrative Procedure Act (Verwaltungsverfahrensgesetz – VwVfG) to comment on it in writing by
2 September 2016 (receipt by BaFin).
"The following is ordered:
General Administrative Act:
- I order the prohibition of the marketing, distribution and sale of certificates linked to creditworthiness risks ("credit-linked notes" (Bonitätsanleihen)) to retail clients within the meaning of section 31a (3) of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG).
- The General Administrative Act shall be deemed announced on the day following the public announcement.
The subject of this Administrative Act is certificates linked to creditworthiness risks (hereinafter referred to as "credit-linked notes"). Certificates are bearer bonds under civil law. Credit-linked notes represent a subgroup of certificates. The characteristic feature of credit-linked notes is that they are linked to creditworthiness or credit risks. The industry association for the issuers of derivatives, the German Derivatives Association (Deutscher Derivate Verband e. V. – DDV), describes credit-linked notes as follows:
I am basing my order on this definition.
With a credit-linked note, the client acquires the bond issued by the issuer in return for payment of the investment amount. Technically, the issuer generally tracks the agreement by embedding a credit derivative – a credit default swap (CDS) – in a bond component1 This composite construction is distributed to clients in the shape of a bearer bond. The repayment of the investment amount and the provision of ongoing payments depend on the (non-)occurrence of a so-called "credit event". Credit events are typically defined as cases of irregular performance on the part of so-called "reference entities" in their credit relationships. Consequently, following the acquisition of a credit-linked note, the client takes on a role of a protection seller that takes over the risk of irregular performance in the underlying credit relationship. In return, the client receives payments for assuming the risk of a credit event.
Credit-linked notes are typically marketed as so-called "investment products" (Anlageprodukte) or "interest-rate products" (Zinsprodukte). However, subjected to economic scrutiny, the role of the client is not one of a lender: rather, the client takes on a role similar to that of a protection seller who provides protection for the risk of a credit event. These are derivatives with the underlying risk of one or more receivables; because they are derived from the credit risk, they are also known as credit derivatives2 It is recognised, therefore, that the product structure transfers the credit risks to other market participants and thus enables default risks to be outsourced3 Ultimately, the contractual relationship is more like that of a protection relationship than an investment. Nevertheless, the payment for the assumption of risk is regularly advertised as "interest".
In the first half of 2016, BaFin conducted a survey on the issue and distribution of credit-linked notes. In the course of this investigation, it surveyed both issuers and investment services enterprises as the distributors of credit-linked notes. It found that issuers were producing credit-linked notes specifically for sale to retail clients. The issuers surveyed acknowledged this, and it could also be recognised from the characteristics of the issued credit-linked notes (e.g. denomination, accompanying information). While some of the surveyed distribution companies stated that they did not distribute credit-linked notes to retail clients or even said they refused to do so since the products were not suitable, a considerable number of distribution companies said they did distribute credit-linked notes to retail clients. Moreover, on the product side, it was found that the group of credit-linked notes was divided into further product subgroups. For instance, credit-linked notes whose interest payment and capital repayment are linked to the credit-worthiness of a single reference entity are being issued and distributed. However, credit-linked notes which are linked to a "basket" of various reference entities are also being offered. There is a wide variety of offer conditions. For example, if a credit event occurs, the interest payment and capital repayment can be reduced proportionally or may even not be made at all, if a credit event occurs to one reference entity in the basket ("worst of" or "first-to-default" structure). Credit-linked notes whose "interest payment" varies depending on a reference rate are also being offered ("flex" structure). In this case, the (non-)occurrence of the credit event only determines whether or not the interest payment and capital repayment are made. The size of the interest payment, on the other hand, is based on a reference rate such as the 3-month Euribor, although a minimum and maximum interest rate can be agreed (e.g. interest payment the level of the 3-month Euribor but minimum 1% and maximum 4%). On the distribution side, it was found that the credit-linked notes are regularly distributed by way of commission-based investment advice, i.e. in conjunction with the giving of personal recommendations to clients. Investment advice is generally given to retail clients within the meaning of section 31a (3) of the WpHG. This particularly affects persons who, based on their sophistication, experience and volume of transactions, may be described as retail clients in the standardised retail business. A sample taken of advice documents indicates that they generally do not explain how credit-linked notes work. Although key terms such as "credit event" are mentioned, the explanations are usually cursory. The investment advice minutes give the impression that they are filled out with pre-formulated text templates.
2. Legal considerations:
The basis in law for the Administrative Act is section 4b (1) no. 1 in conjunction with section 2 no. 1a 1st alternative of the WpHG. This authorises BaFin to take measures including the prohibition or restriction of the marketing, distribution or sale of certain financial instruments or financial instruments with certain specified features.
Marketing, distribution and sale means any activity designed to promote sales, in particular recommending such certificates by way of investment advice, and includes the simple sale of such financial instruments without the provision of investment advice. The order is directed both at issuers of credit-linked notes and at companies and persons marketing, distributing or selling credit-linked notes to retail clients. The order refers to future activities. Activities already concluded remain unaffected. Related marketing, distribution and sales activities which are in progress must be ceased immediately upon entry into force of the General Administrative Act.
a) Financial instruments within the meaning of section 4b (1) of the WpHG:
The measure is directed at the marketing, distribution and sale of credit-linked notes. As a subgroup of certificates, credit-linked notes are financial instruments with certain specified features within the meaning of section 4b (1) no. 1b of the WpHG in conjunction with section 2 (2b) of the WpHG.
b) Significant investor protection concerns:
The marketing, distribution and sale of credit-linked notes to retail clients raise significant investor protection concerns within the meaning of section 4b (2) no. 1a of the WpHG. I base the assumption of these concerns on the following circumstances:
Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 ("MiFIR")4 will introduce a directly applicable product intervention right in the member states. The Regulation has not yet entered into force. The authorisation for product intervention was introduced early at the national level in the German Retail Investor Protection Act (Kleinanlegerschutzgesetz)5. The legal basis for authorisation in section 4b of the WpHG is thus based on the wording of the European Regulation. The national provision of section 4b of the WpHG should therefore be interpreted in the light of the European provision. On 19 December 2014, the European Securities and Markets Authority (ESMA) published Technical Advice6 on the conditions for a product intervention measure. These criteria have now been included in a draft delegated regulation of the European Commission7. It states that the existence of significant investor protection concerns must be assessed using criteria including the following:
- the degree of complexity of the financial instrument in relation to the type of clients;
- the type of clients typically targeted (e.g. retail clients);
- the degree of transparency of the financial instrument (e.g. the ability to identify risks or the use of product names that imply a particular level of security);
- the distribution practices associated with the financial instrument;
- sufficient access to relevant information about the financial instrument.
In the case of credit-linked notes, there is not just one relevant criterion; the product structure and sales relate to a number of criteria which justify the significant investor protection concerns.
aa) High product complexity:
Investor protection concerns are raised primarily by the high degree of product complexity which the average retail client would typically not be able to cope with. Typically, certificates are basically linked to underlyings with which retail clients are generally familiar or for which they have access to relevant sources of information, such as shares or indices. However, the situation with credit-linked notes is different, since in this case the underlyings are creditworthiness or credit risks. Retail clients are generally not familiar with these. The assessment of the question of whether a credit event will occur in relation to the underlying reference liability is of particular significance. In practice, the ISDA Credit Derivatives Definitions published by the International Swaps and Derivatives Association (ISDA) are generally used regarding possible credit events. According to these, a credit event includes the following, among other things8:
- bankruptcy of the reference entity;
- calling in a liability early due to a contractual breach on the part of the reference entity;
- possibility of calling in a liability early due to a contractual breach on the part of the reference entity with the exception of late payment;
- late payment by the reference entity, repudiation/moratorium (i.e. repudiation of a liability or imposition of a moratorium by the reference entity or a state agency with subsequent default); and
- restructuring of liabilities.
The prudent client must undertake an assessment of the risks to be assumed and monitor these throughout the time to maturity in order to determine whether the repayment of the investment amount is likely and whether the assumption of credit risk is adequately compensated for by the level of interest promised. At most, it is possible to carry out such an assessment by analysing the prices of the embedded CDS. CDS are contractual relationships in which default risks are hedged in return for the payment of risk premiums. However, up-to-date information on the CDS market is generally only provided by specialist, professional information providers who charge for their subscriptions and are thus not usually used by retail clients. It may therefore be ruled out that the very great majority of retail clients is in a position to estimate the probability of one of the above-mentioned scenarios occurring and thus of the performance of the corresponding credit-linked note with any reasonable accuracy. Moreover, the client does not only bear the risk of a credit event at the level of a reference entity, but also the default risk of the issuer with whom the client has a contractual relationship. In other words, apart from the risk of irregular performance in the underlying liability, there is the additional risk of total loss if the issuer of the credit-linked note is not able to pay it back. The retail client also needs to keep this risk in mind.
Apart from the question of the probability of a credit event, from the retail client's point of view it is also not clear what happens to the repayment after the occurrence of a credit event. Offer conditions specify the determining of a repayment sum by a third party such as an ISDA committee. An auction or average calculation may be used to determine the size of the repayment sum. Unlike in the repayment of certificates linked to known underlyings (e.g. repayment according to the current share price), the complex valuation process following a credit event makes it impossible for retail clients to gain an adequate idea of the performance of credit-linked notes if a credit event should occur. This situation also highlights the specific complexity of the product structure.
This specific complexity is particularly evident in the case of credit-linked notes which are linked to a basket of multiple reference entities. With such products, the client has to assess the creditworthiness of multiple reference entities at once. If this product structure also has a repayment profile which is based on a "worst-of" mechanism (i.e. if even one reference entity in the underlying basket undergoes a credit event, repayment/ending of the investment occurs), it is not possible for a retail client to undertake a cumulative assessment of the total risk. Therefore, retail clients are also unable to estimate whether the promised interest payment is adequate compensation for the total risk assumed. The credit-linked notes with a "flex" structure also illustrate the particular complexity of the product structure. In this case, the link between risk and return seems to have been removed: while the credit risk component of the product determines whether the interest payment takes place, the size of it is based on a reference rate. Any subsidising of the promised interest, e.g. by setting a minimum rate, is not clear due to the complexity of the product and the accumulation of its individual components. In this case, too, retail clients are unable to determine whether the promised return is adequate compensation for the risk assumed.
Civil law rulings have recognised that fixed-interest bonds linked to a credit derivative are regarded as complex owing to their structure: in particular, the risks of a fixed-interest bond with integrated credit derivative are not comparable with the risks of a "normal" fixed-interest bond9. Its particular way of working is primarily characterised by the various possibilities of irregular performance of a reference entity which may fulfil the definition of a credit event. Generally, retail clients have no concept of the conditions which need to be fulfilled for an adequate understanding of the legal term "credit event".
Incidentally, other European supervisory authorities also share the view that credit-linked notes should be classed as complex products. For example, ESMA included credit-linked notes as an example of debt instruments embedding a derivative which have a complex structure, making it difficult for the client to understand the risk10. The Italian securities supervision authority (Commissione Nazionale per le Società e la Borsa – CONSOB) also judges credit-linked financial products to be highly complex and typically unsuitable for retail clients11.
bb) Retail client participation in markets dominated by professional clients; access to relevant information:
Significant investor protection concerns also arise as retail clients are led to believe they make a long-term yield-oriented investment whilst they in fact become exposed to the complex features of a highly professional market segment. Credit-linked notes are financial instruments that are based on credit risks which, in turn, arise as a result of CDS trading. Trading in CDS is defined solely by the actions of professional market participants that have the relevant expertise. Contractual conditions for CDS are laid down in standard agreements developed by the International Swaps and Derivatives Association that are usually aimed at institutional market participants. As trading in CDS takes place over the counter, the prices cannot be checked against a centralised trading venue. Assessing the market value of a CDS requires advanced expertise. For these reasons, the CDS trading market is generally inaccessible to retail clients. The complexity and resource requirements of trading in CDS alone would be too great a challenge for retail clients. Against this background, it is incomprehensible why issuers and distribution companies would give retail clients access to this market segment by means of credit-linked notes. In this market, retail clients are at a disadvantage to all other market participants in every respect.
cc) Misleading product name and description:
Another source of investor protection concerns is the product name and description. The naming of the product as a "credit-linked note" and the product descriptions used to market, distribute and sell it are misleading. The name "note" in particular is misleading: Despite what the German name may suggest, credit-linked notes (Bonitätsanleihen) are not bonds (Anleihen) in the traditional sense (e.g. a corporate bond issued as part of debt financing, offering the payment of interest in exchange for providing the capital). By contrast, in the case of a credit-linked note, the client acquires from the issuer a debt security against the payment of an investment amount. The repayment of the investment amount and the payment of any interest is linked to the (non-)occurrence of a credit event. Credit events are typically defined as cases of irregular performance on the part of a certain reference entity in credit relationships. Consequently, following the acquisition of a credit-linked note, the client takes on a role of a protection seller that assumes the risk of default in the underlying credit relationship. In return, as a premium, the client receives payments for assuming the risk of a credit event.
Upon realistic assessment, the actual contractual relationship differs from the relationship suggested by marketing, distribution and sale activities: Credit-linked notes are typically marketed as so-called "investment products" (Anlageprodukte) or "interest-rate products" (Zinsprodukte). However, subjected to economic scrutiny, the role of the client is not one of a (bond) lender: Instead, the client takes on a role similar to that of a protection seller that takes over the risk of a credit event and provides protection for it12. The contractual relationship, therefore, seems to establish insurance against default rather than the provision of bond capital. This confusion of roles embedded in the product structure and not clarified during distribution leads to misunderstandings on the part of retail clients who see the product as an interest-bearing security.
For instance, the records of investment advice given often include the remark that the recommended credit-linked notes offer better yields than German Bunds or a savings bank certificate (Sparkassenbrief). Occasionally, explicit comparisons are made with time deposits and other savings deposits. This suggests that credit-linked notes are marketed in direct comparison with traditional savings products, as the option promising better yields. This applies all the more as the payment for the assumption of risks is regularly marketed as "interest". The relevant investment advice minutes remark, for instance, that the clients wished "investments earning interest income". This wording is misleading, too, as the payment constitutes a "premium" for the assumption of risk of the reference entity rather than an "interest payment"13. Moreover, it needs to be noted that training materials prepared by product providers for distribution companies do include remarks on how credit-linked notes work (e.g. that CDS are embedded in the note, that CDS premiums are collected); this information, however, is usually missing from the investment advice records. This practice raises significant investor protection concerns as, typically, retail clients would certainly not choose to invest in credit-linked notes if they had the relevant knowledge of the product features and marketing practices.
dd) Risk of a conflict of interest inherent in the product structure:
Another reason for concern in terms of investor protection within the meaning of section 4b (2) no. 1a of the WpHG is the risk of a conflict of interest inherent in the product structure. Issuers or affiliated undertakings of the issuers may take on more roles other than just product providers. It cannot be ruled out that the credit risks applied when structuring credit-linked notes may come from the (group's) own portfolio. It cannot be ruled out, either, that issuers or their affiliated undertakings may have business relationships with the reference entities relevant to the performance of the credit-linked note. These potential conflicts of interest are capable of impacting the interest situation of the credit-linked note client as the business relationships also include the relationships in the area of lending or trade in reference liabilities, among other things. Even the issuers recognise the real risk to the investor, pointing this out in their offer conditions and assessing the interest situation as potentially problematic. Offer conditions for credit-linked notes include, for example, the following remarks:
This clearly shows that the contractual terms give the issuers plenty of leeway in terms of additional business relationships. In particular, the issuers reserve the right to exert influence on the reference liabilities underlying the credit-linked notes by engaging in other business activities. Therefore, there is a potential risk that issuers may exert influence on the creditworthiness of the reference entity. This, however, is at odds with the interests of the retail clients that credit-linked notes are sold to.
ee) Wide spread among retail clients:
In addition to the qualitative concerns as described above, there are also some significant quantitative concerns. While there is no specific definition of "significant concerns", taking into account the criteria listed in the ESMA note and the draft Delegated Regulation14 as well as a cumulation of these concerns in individual cases will always lead to the significance threshold being reached as required by the basis in law.
The investor protection concerns are significant also because of the particular need to protect the group of customers affected here as it is at a structural disadvantage with regard to credit-linked products. Credit-linked notes are widespread in the retail client sector. A large number of clients are affected. BaFin's market survey showed that the products are being actively sold to retail clients as a matter of course, both by issuers and intermediaries. This clearly shows that the sales are often made to the client group that are typically less sophisticated and experienced (retail).
Market statistics published by the German Derivatives Association show a growing relevance: The importance of credit-linked notes for retail distribution has grown significantly in the recent past. According to the Association, the market volume of credit-linked notes has been growing continuously. Whereas the market volume at the beginning of 2015 was EUR 5,255,451,000 (market share of 7.4%), at the beginning of 2016 the market volume amounted to EUR 5,644,092,000 (market share of 9.3%). The market volume and market share grew continuously in the course of 2015, too. The market developments were also reflected in the opinions given by market participants asked as part of BaFin's survey – they confirmed the growing importance of credit-linked notes.
c) Particular appropriateness and proportionality within the meaning of section 4b (2) nos 2 and 3 of the WpHG:
With this General Administrative Act, BaFin is counteracting the described risks. The measure complies with the requirement set out in section 4 (2) no. 2 of the WpHG: Ordering the ban on marketing, distribution and sale prevents the risks inherent to investment in credit-linked notes from materialising.
The measure is also particularly proportionate within the meaning of section 4b (2) no. 3 of the WpHG. The proportionality arises from the risks identified, the level of expertise of the investors or market participants involved and the likely consequences for the investors or market participants. The ban is an appropriate measure to ensure effective protection of retail clients. Compared with professional market participants, retail clients cannot to the same extent hedge or absorb losses that may arise from, for instance, investments in credit-linked notes. Also, they typically have less expertise and restricted access to relevant information that is necessary to adequately assess credit-linked notes and their risks. Upon realistic assessment, retail clients are at a structural disadvantage as compared with professional market participants in the area of credit-linked notes, in particular in terms of risk-bearing capacity and expertise.
The measure is also proportionate with regard to the likely ramifications. This General Administrative Act only applies to sales to retail clients. Professional clients shall remain unaffected. Even if credit-linked notes were to disappear completely, retail clients would have enough investment alternatives which are better suited to accommodate the knowledge and experience of average retail clients.
The measure is also proportionate for the market participants concerned that provide the product. It is not to be expected that a market restriction will threaten the viability of the product providers as, according to the information provided by the stakeholders themselves, the market shares affected are single-digit. In all other respects, it can be assumed that the market volume of credit-linked notes will shift to other investment classes.
d) General proportionality of the order:
The measure also complies with the requirements of the proportionality principle. The ordering of a ban on marketing, distribution and sale to retail clients is motivated by investor protection within the meaning of section 4b (2) no. 1a of the WpHG. This constitutes a legitimate public purpose. The order complies with the standards of proportionality: It is suitable, necessary and appropriate.
The order is capable of achieving the legitimate public purpose of protecting retail clients' investor interests. By banning marketing, distribution and sale to retail clients, sales of credit-linked notes to this group of customers will be prevented. Thus, any losses caused by such investment will not materialise.
The ban on marketing, distribution and sale to retail clients is also necessary as a more moderate measure that would be equally capable of remedying the significant investor protection concerns is not apparent. Only a complete ban is capable of achieving comprehensive investor protection. A ban applying only to individual credit-linked notes would not achieve the same level of investor protection and so is not equally effective. The investor protection concerns (e.g. complexity, conflicts of interest) are inherent in the product class and may not be remedied by intervening against individual products.
A requirement to, for example, provide clarifying product names and/or descriptions does not constitute a more moderate but equally effective measure, either. Even if only objective marketing of credit-linked notes was allowed, this would not remedy the investor protection concerns beyond misleading description.
A less invasive measure would be imposing conditions on distribution to retail clients, for instance higher requirements on client education as part of investment advice. However, such conditions would not have the same intensity in terms of investor protection, either. Higher requirements for distribution are not capable of remedying the structural concerns inherent in the credit-linked note product class. Also, the effectiveness of these more moderate conditions would be compromised by the unchanged commercial interest to sell on the part of product providers and intermediaries.
A warning issued by BaFin would not be a more moderate but equally effective measure for remedying the investor protection concerns. Lacking investment experience, retail clients tend to regard risk warnings as purely hypothetical. A typical retail client lacks the experience to realistically assess the likelihood of a loss scenario materialising.
Limiting the measure to banning active distribution would not constitute a more moderate and equally effective remedy as retail client protection from dangers inherent in the product is still necessary even when no investment advice is given.
The measure ordered is appropriate. The ban also takes into account the interests of product issuers and intermediaries. The interests of product issuers involve raising capital for their own financing purposes on the market by issuing the securities subject to this ban and collecting the issuer margin regularly factored in the products. Intermediary undertakings focus on earning the fees promised by the issuers for distributing the products subject to this ban. It is in the public interest, however, to protect retail clients from financial instruments that give rise to such significant investor protection concerns. Having weighed these interests against each other, I have concluded that the legitimate business interests of the product issuers and intermediary undertakings must give way to the public interest in the necessary investor protection of retail clients.
First of all, this conclusion is based on the circumstance that in order to ensure the necessary retail client protection, the marketing, distribution and sale of the bonds subject to this Administrative Act do not have to be banned outright. This is explicitly not a general ban on marketing, distributing and selling credit-linked notes. Instead, the ban only applies to marketing, distribution and sale to retail clients within the meaning of section 31a (3) of the WpHG. Corresponding activities engaged in by product issuers and intermediaries with professional clients remain allowed. Retail clients that, based on their experience, knowledge and expertise are capable of participating in the credit-linked note market, can be categorised as professional clients pursuant to section 31a (7) of the WpHG. Consequently, this measure only applies to retail clients that do not have the knowledge and experience necessary to invest in the bonds subject to this ban, which places them at a structural disadvantage to the professional clients. Only the interest in protecting this client group weighs heavier than the commercial interest of issuers and intermediary undertakings.
The measure does not impose an excessive burden on product issuers and intermediaries, either. The market restriction to the detriment of product providers is not considered unreasonable as the bonds subject to this ban constitute a small part of the market in structured bonds (certificates). In all other respects, it can be assumed that the market volume of the bonds subject to this ban will shift to other financial instruments. Issuers and intermediaries regularly offer a wide range of variously structured bonds. Consequently, issuers and intermediaries have the option to offer bonds other than the ones subject to this ban and to continue to pursue their interests as described above (funding, making a profit).
In the interest of protecting retail clients, on the other hand, this ban is necessary. Compared with professional market participants, retail clients cannot to the same extent hedge or absorb losses that may arise from, for instance, investments in the bonds subject to this ban. Also, they typically have less expertise and restricted access to relevant information, both of which are necessary to adequately assess the risks linked to the bonds subject to this ban. Upon realistic assessment, retail clients are at a structural disadvantage to the providers of such bonds.
The matters of retail clients are not affected more than necessary by the ban ordered. Most importantly, when the bonds subject to this ban are no longer available to them, retail clients will still have enough investment alternatives which are better suited to accommodate the knowledge and experience of average retail clients. As a result, retail clients' investment possibilities will not be compromised in an unreasonable way.
e) Public promulgation:
Pursuant to section 17 (2) sentence 1 of the FinDAG, the promulgation shall be public. The public promulgation shall be made by means of an electronic announcement on the BaFin website (section 17 (2) sentence 2 of the FinDAG in conjunction with section 41 (4) sentence 1 of the VwVfG).
Pursuant to section 4b (6) of the WpHG, objections to and appeals against the measures under subsection (1) shall have no postponing effect.
I would also like to point out that, in accordance with section 39 (2) no. 2b of the WpHG, an administrative offence is deemed to be committed by any party who, intentionally or negligently, fails to comply with an enforceable order under section 4b (1) of the WpHG.”
1 Cf. Lause in: Gruber/Gruber/Braun, Asset-Backed-Securities und Kreditderivate, 2005, p. 29 ff.
2 Trafkowski, Kreditderivate und Versicherungsderivate als Risikotransferverträge, 2007, p. 24.
3 Zahn/Lemke, Die Credit Linked Note – Anleihe mit integriertem Kreditderivat, WM 2002, p. 1536, 1537.
4 OJ L 173 of 12 June 2014, p. 84.
5Explanatory memorandum on the draft Retail Investor Protection Act (Begründung zum Gesetzesentwurf eines Kleinanlegerschutzgesetzes), Bundestag printed paper, 18/3994, p. 53.
6Final Report, ESMA's Technical Advice to the Commission on MiFID II and MiFIR (ref.: 2014/1569), p. 190 ff., available at: www.esma.europa.eu
7 Commission Delegated Regulation (EU) supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions.
8 Cf. Benzler/Brunner-Reumann in: Burghof/Rudolph/Schäfer/Schönbucher/Sommer (editors), Kreditderivate, 3. ed., 2015, p. 367.
9 Karlsruhe Higher Regional Court (Oberlandesgericht Karlsruhe), ruling of 29 August 2013 - 9 U 24/11 (Constance Regional Court (Landgericht Konstanz)), BKR 2014, p. 205 ff.
10 Guidelines on complex debt instruments and structured deposits of 4 February 2016, ref. ESMA/2015/1787.
11 Comunicazione n. 0097996 del 22-12-2014, Comunicazione sulla distribuzione di prodotti finanziari complessi ai clienti retail.
12Cf: Karlsruhe Higher Regional Court (Oberlandesgericht Karlsruhe), ruling of 29 August 2013 - 9 U 24/11 (Constance Regional Court (Landesgericht Konstanz)), BKR 2014, p. 208, 210.
13 Cf. Zahn/Lemke, Die Credit Linked Note – Anleihe mit integriertem Kreditderivat, WM 2002, p. 1536, 1537.
14Final Report, ESMA's Technical Advice to the Commission on MiFID II and MiFIR (2014/1569), p. 190 ff., available under: www.esma.europa.eu; Commission Delegated Regulation supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions.