German Regulators To Identify “Risky Investments”

German Regulators To Identify “Risky Investments”

German regulators may soon find themselves in the investment selection and recommendation business, as the country’s finance minister, Wolfgang Schaeuble, left the door open to banning some financial products deemed too risky.

German officials stepping up regulation of unregulated markets

According to a report in Bloomberg, Schaeuble directed German regulators to formulate rules to step up supervision of products traded on unregulated markets. “But transparency and traceability must be increased. Whether the measures under discussion should include bans on certain products in the gray market remains to be seen,” he was quoted as saying.

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Germany is in the process of tightening its regulation of financial products, particularly in light of last month’s insolvency of Prokon Regenerative Energien GmbH, a clean-energy developer that raised $1.9 billion by selling profit- participation rights to about 75,000 small investors, according to the report. Schaeuble cited Prokon as one of the reasons behind him asking German regulators to draw up new rules on supervision.

Bankruptcy leaves investors, employees out in cold, regulators asking questions

Prokon had promised investors a 6 percent return on their investment, to be generated by 314 wind turbines.  The company, with 1,300 employees, filed for bankruptcy protection last month, leaving investors and employees in the lurch.

The German justice minister is also stepping in, noting that certain products should be subject to limits on advertising and also pushing for regulators to determine if certain products involved excessive risk for consumers.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)

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