Disclosure Requirement On Profit Margins And Commissions

Originally published 30 November 2012.

The disclosure requirement on banks' remuneration in the sales of securities is the subject of numerous, sometimes contradictory decisions of German courts. The Federal Supreme Court (Bundesgerichtshof, BGH) took the opportunity to deal with this issue in various decisions, most recently in June and October 2012. The following sections will provide you with a summary of the BGH's most current jurisdiction, which is in particular relevant for the sale of certificates.

Principle: No disclosure requirement on profit margin

Credit institutions regularly execute customer orders on the purchase of securities as dealing on own account with fixed price or on a commission basis (No. 1 paragraph 1 Special Conditions for Dealings in Securities). Pursuant to current BGH jurisdiction, banks are, in both cases, apart from two exceptions not required to disclose their profit obtained.