BaFin's draft of the KAGB amendments contains important clarifications on lending and MiFID services. Structures based on the division of labour are increasingly accepted as a market reality. However, governance, responsibilities and regulatory allocation are moving more to the fore.
BaFin has published a draft circular on the amendments to the KAGB . The focus is on topics such as liquidity management tools, MiFID services, requirements for managing directors and questions of lending.
The specific regulations deserve attention in isolation. It is also interesting to note the basic supervisory attitude that can be seen in several passages of the draft.
This is particularly evident in the remarks on lending. BaFin clarifies that, according to its understanding, lending is not part of portfolio management within the meaning of the AIFM Directive and can therefore be outsourced separately from it. This must be distinguished from classic advisory structures, which do not take over portfolio management, but support it in analysis, structuring or decision-making. The draft, on the other hand, explicitly addresses the outsourcing of the lending function itself.
The regulatory balance is remarkable. BaFin opens up the possibility of such outsourcing in principle, but does not combine this with a regulatory carte blanche. Rather, it expressly points out that the outsourcing company may be subject to independent licensing obligations under the KWG and that this must be examined on a case-by-case basis.
In itself, it is a question of technical interpretation. Nevertheless, it could indicate a broader development.
For years, KVG structures based on the division of labour in particular have been subject to the discussion as to whether a far-reaching division of labour between KVG and specialised third-party managers is compatible with the supervisory model of a responsible capital management company. The supervisory authority has regularly pointed out that the responsibility of the KVG is not relativised by the fact that individual functions are performed by external specialists.
The current draft does not explicitly answer this fundamental question. However, it seems as if the existence of structures based on the division of labour is increasingly accepted as a market reality. The actual discussion thus seems to be shifting from the legitimacy of such models to their regulatory design.
A similar idea can be found in MiFID services. In terms of content, little is likely to change for many KVGs. The special feature of the KAGB, according to which asset management companies can provide certain MiFID services without a separate licence as an investment institution, remains in principle. Existing permits also enjoy grandfathering protection.
At the same time, BaFin attaches great importance to a more precise regulatory allocation. Investment advice, investment brokerage or share certificate custody should no longer be understood as merely "concurrent" powers, but as independent services that are clearly named, assigned and transparently reflected in the authorisation notice.
In both cases, a similar pattern emerges. Neither the outsourcing of credit functions nor the provision of MiFID services are fundamentally questioned. Rather, the supervisory authority seems to attach importance to ensuring that it remains clear at all times within increasingly complex organisational structures who performs which function, on what regulatory basis this is done and who is responsible for it.
📌 Result:
The line of development that has been recognizable for years is thus continuing. Supervision seems to have largely left the fundamental debate on the permissibility of structures based on the division of labour behind it. Probably not necessarily out of enthusiasm, but rather out of pragmatism: the reality of the market has long been organized according to the division of labor.
However, the requirements for the clear allocation of functions, responsibilities and regulatory bases (governance). In this respect, fund regulation and supervisory administrative practice are increasingly approaching a logic that banks have known for years. One could also say that the regulatory requirements for asset management companies and credit institutions are converging, at least in questions of Governance, transparency and attribution of responsibility (convergence of asset management companies and credit institutions).
