Information about EdW

Legal background

Investors who use securities services in Europe have enjoyed protection under the Council Directive 97/9/EC on investor-compensation schemes since 1997. This Directive established that compensation is owed when a securities trading company is no longer able to return clients´ securities or repay money in accordance with the legal and contractual conditions applicable. It has lead to the creation of a uniform Europe-wide investor compensation system.

The Council Directive 97/9/EC was implemented in 1998 by the Deposit Guarantee and Investor Compensation Act (Anlegerentschädigungsgesetz - AnlEntG; formerly Einlagensicherungs- und Anlegerentschädigungsgesetz - EAEG). The Act has established harmonised minimum protection for investors across the EU and serves to stabilise the banking and financial services sector.

The AnlEntG forms the legal basis for the operations of EdW and assigns to it credit institutions that are not depository credit institutions as well as financial services institutions and investment companies under section 1 (1) Nos. 2, 3 and 4 of the AnlEntG. The institutions assigned to EdW are generally also referred to as securities trading companies.

Currently some 780 securities trading companies are assigned to EdW (as at October 2018).

EdW is a Federal Government Special Fund without legal capacity that was established at Kreditanstalt für Wiederaufbau (KfW) in accordance with section 6 (1) of the AnlEntG.

For the group of deposit-taking credit institutions incorporated under private and public law, there are four other separate compensatory funds in the Federal Republic of Germany. The German private commercial banks’ statutory compensation scheme for depositors and investors called the Entschädigungseinrichtung deutscher Banken GmbH (EdB) is assigned to the Association of German Banks, whereas the compensation scheme of public banks in Germany named the Entschädigungseinrichtung des Bundesverbandes öffentlicher Banken Deutschlands GmbH (EdÖ) is allocated to the Association of German Public Banks. In addition to these compensatory funds, the institutional protection schemes run by the Deutscher Sparkassen- und Giroverband (DSGV) (Savings Banks Finance Group) and the Bundesverband der Volks- und Raiffeisenbanken (BVR) (National Association of German Cooperative Banks) are also recognised as deposit guarantee schemes.

All compensation schemes are under the supervision of the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin).

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© 1998-2017 EdW - Entschädigungseinrichtung der Wertpapierhandelsunternehmen, Berlin