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Risk Management

Automated trading environment

Current guidelines issued by the European Securities and Markets Authority (ESMA) impose inter alia specific organisational requirements on the trading business of institutions in an automated trading environment. Below you will find the draft BaFin circular with which these guidelines are to be implemented.

Prudential requirements for IT – BAIT

The prudential requirements for IT, which are mainly intended for the management boards of credit institutions, aim to provide a more transparent outline of supervisors' expectations regarding IT security.

ICAAP / ILAAP

The establishment of an internal capital adequacy assessment process (ICAAP) and an internal liquidity adequacy assessment process (ILAAP) is a crucial supervisory requirement to be met by institutions.

Minimum Requirements for Risk Management

Risk management at German credit institutions must comply with the Minimum Require-ments for Risk Management (Mindestanforderungen an das Risikomanagement – MaRisk). These pages provide information on the current version of October 2017.

Ordinance on the Supervisory Requirements for Institutions’ Remuneration Systems

The Remuneration Ordinance for Institutions (Institutsvergütungsverordnung) is intended to realign remuneration more closely to companies’ long-term success. Moreover, inappropriately high bonus payments are to be prevented by giving Germany’s Federal Financial Supervisory Authority (BaFin) greater powers of intervention.

Interest rate risk

Credit institutions are required to calculate, on a regular basis, the impact of a sudden and unexpected change in interest rates on their interest rate risk in the banking book and to report this to supervisors.

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