A high-performing financial system requires diverse providers and business models, according to Bundesbank board member Lutz Lienenkämper, who spoke at the third specialist conference on the regulation of securities institutions in the capital markets union in Frankfurt. He stated that it is a strength of the German financial center that its nearly seven00 securities firms are very heterogeneous. These entities will play a significant role in the savings and investments union by advising investors, managing assets, and ensuring liquid securities markets. Representatives from academia and regulatory authorities at this year's conference discussed topics including risk management for securities institutions, ESG, and crypto-asset services within supervisory law, examining these subjects from both German and European perspectives.
Lienenkämper emphasized the necessity of close collaboration between national and European supervisory authorities. An institution operating across borders experiences Europe first through its contact with authorities and must be able to trust that identical circumstances are assessed by the same standards everywhere. Beyond uniform rules, a shared supervisory practice is essential, which develops through direct dialogue. This is where the European Commission's market integration and supervision package applies, with its success measured by whether market access for firms and investors genuinely becomes easier in everyday business.
More individuals will utilize the capital market only if they trust it, Lienenkämper noted, advocating for enhanced investor protection alongside improved financial literacy among the population. Better investment opportunities unfold their benefits once people can assess opportunities, risks, and costs. The Bundesbank contributes its long-standing experience in financial education to federal initiatives, helping individuals make self-determined investment and retirement decisions while strengthening independence and participation.
Regarding risk management, Lienenkämper welcomed new requirements taking effect on January 1, 2027, specifically designed for securities institutions. The core concept is correct because a securities institution is not a small bank and requires a framework suited to its own business rather than a scaled-down version of a different model. Previously, banking regulations were applied mutatis mutandis to securities firms, while the new framework remains aligned with banking rules.
The updated regulations are more principles-oriented, requiring uniform supervisory practice. The Bundesbank will contribute insights from ongoing supervision to achieve comprehensible standards and reliable dialogue. Principles-orientation demands judgment from both sides, as institutions must justify why their chosen solution is appropriate, and regulators must recognize suitable solutions even if they differ across cases.
Representatives from regulatory bodies shared practical experiences, discussing supervisory challenges in Germany, France, and Luxembourg, alongside requirements for effective and proportional supervision from a European perspective. Panels addressed new risk management demands and their implications for small and medium-sized institutions, as well as questions surrounding the custody of crypto-asset services.
The conference was jointly organized for the third time by the University of Applied Sciences of the Bundesbank and the University of Basel, providing experts a platform to discuss current supervisory trends regarding securities institutions.
