Legal Environment

The financial services industry (banks, funds manager, insurance companies and other) faces the largest risks arising from financial instruments because trading in these instruments is their core business. Banking supervisory authorities and legislators have reacted to this situation with fundamentally new legal provisions imposing very high requirements on the risk management of banks. In 1993 the Washington-based organization Group of Thirty (G30) published a study on the risk management of derivatives entitled “Derivatives: Practices and Principles”. This study is also known as the G30 Report and puts forward recommendations which form the basis of the Minimum Requirements for Trading Activities (MaH) in Germany and other such regulations. The following list shows the most important recommendations made in the G30 Report.