On 6th February, the German Finance Ministry released a first draft Act on Ring-Fencing and on Recovery and Resolution Planning for Credit Institutions. On 5 March, the Draft was introduced as a bill in the German Parliament. Clifford Chance's report explains the scope.
The Draft is, amongst other things, intended to implement the "Key Attributes of Effective Resolution Regimes for Financial Institutions" published by the Financial Stability Board (FSB) in November 2011 and follows the draft EU Directive on the Recovery and Resolution of Credit Institutions and Investment Firms (RRD) on recovery and resolution plans (RRPs).
The Draft is also a response to the proposals by the High-Level Expert Group on reforming the structure of the EU banking sector ("Liikanen-Report") released on 2 October 2012 by requiring the separation of certain trading activities from deposit-taking activities and imposing further risk management and organisational obligations on German credit and financial services institutions.
The Draft frequently refers to other proposed laws such as the draft Act to implement the CRD-IV package (intended to implement the future Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR)), the draft Investment Code (intended to implement the Alternative Investment Fund Managers (AIFM) Directive in Germany) and the draft German High Frequency Trading Act and will therefore be subject to future amendments and alignments.
Link to full report
© Clifford Chance
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