The democratization of investment

Wolfgang Becher, Senior Manager at zeb: „There are several potential winners.“

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Isn't Germany a little late with its plan to map securities electronically?
Wolfgang Becher:
Germany is late, but not too late. After all, e-securities have already been offered in Germany up to now - only with the corresponding disclaimers in the prospectus. It is a grey area. If this is now regulated by law, it will bring legal certainty and simplify the process.

Can this still be achieved in this legislative period?
The project was already mentioned in the coalition agreement 2018. Then two years little will have happened. And now the plan is to pass the law this year. That will be too sporty. But I expect the Bundestag to pass the law in the first quarter of next year. 

What is positive about the draft bill?
The draft provides for a great openness to technology. It would also create a legal framework for future technologies that we are not yet familiar with. We don't just have to think of the block chain. And the basic process of issuing and trading securities would remain the same.
Another positive aspect is that there will continue to be centralized supervision in the form of the Federal Financial Supervisory Authority.

Is BaFin currently well positioned for this - keyword Wirecard?
BaFin already has a team that is well versed in the subject matter. It is certainly an exciting question as to how BaFin is organized in this respect. However, I do not assume that there are thousands of new registers to be monitored. So: This is a solvable task.

Are there also critical points?
I don't think it is one hundred percent clear yet how consumer protection is doing. In addition, there are still questions to be answered as to what happens in the event of a securities register becoming insolvent, i.e. when the registrar becomes insolvent. The possession of the security should actually not be affected by this. How this looks like in practice is still to be clarified in detail. A third point: Currently there is a far-reaching definition of acquisition in good faith. This could open up the possibility of fraud. If the issuer is established in the market, this is more of a theoretical problem. Here one will first have to gain practical experience and, if necessary, make adjustments.

The current draft regulates e-securities, but not e-shares - will they follow?
This law is a pioneer law, others in this area will follow. It also stipulates a review. I expect that one result of this review will be the introduction of the e-share - by 2023. And it will also accelerate a further discussion - the one about an electronic euro, i.e. digital central bank money, also known as CDBC. 

Who are the losers of the new regulation - the current custodians?
The current custodians are not the losers per se - it is not impossible that they will also become providers. The banks will be potential losers if they do not address the issue. 

And who are the winners?
There are several potential winners. These are for example new providers. It is not yet clear who these new providers will be. The winners are primarily the investors. The e-securities can make processes simpler and cheaper. In the best case, this leads to a democratization of the investment. One example: If I have to finance a property worth 200,000 euros today, it is not worthwhile to issue a bond. However, in the future this could be realized with such amounts. Completely new asset classes could be launched and new customer groups could be developed.

What does this mean for zeb?
First of all, it is a new technology that we are continuing to monitor closely. The exciting question is then what will emerge from it. This is where FinTechs will be able to use our consulting expertise, as well as banks and savings banks of all sizes: it's all about the customer perspective, retirement provision, asset accumulation, asset management - a whole bouquet of new products, perhaps even completely new business models, will emerge.


Wolfgang Becher, zeb
„A whole bouquet of new products, perhaps even completely new business models, will result.“

Wolfgang Becher, Senior Manager, zeb