Germany’s financial regulator BaFin is intervening in the market for turbo certificates to improve investor protection. New regulations taking effect Tuesday require providers to warn investors about the risks before trading these complex products.
Thorsten Pötzsch, BaFin’s executive director for securities supervision, said the highly speculative products carry significant risks, particularly the total loss of invested capital. Retail investors had not adequately recognized these risks so far.
Additionally, a knowledge test will be introduced to ensure investors understand the complexity and dangers of turbo certificates before investing. Harmful incentives such as reduced order fees are now also banned.
A previous BaFin investigation found that nearly three-quarters of retail clients in Germany lost money trading turbo certificates, with average losses of 6,358 euros.
Source: www.tagesspiegel.de
