Efficient Capital Markets and Portfolio Investment

Germany has a very open economy,
routinely placing among the top countries in the world for exports and inward and outward
foreign direct investment. As a member of the Eurozone, Germany does not have sole national
authority over international payments, which are a shared task of the Eurosystem (and the
European Central Bank) and the German central bank (Bundesbank). There are no restrictions
on capital movements into or out of Germany, based on European law.

However, as the case of
Cyprus showed, the national parliament can, with the permission of the EU and the ECB, impose
temporary restrictions in exceptional cases. Global investors see Germany as a safe place to
invest as the real economy continues to outperform other EU countries and German sovereign
bonds retain their “safe haven” status.

Listed companies and market participants in Germany must comply with the Securities Trading
Act, which bans insider trading and market manipulation. Compliance is monitored by the
Federal Financial Supervisory Authority (BaFin) while oversight of stock exchanges is the
responsibility of the state governments in Germany (with BaFin taking on any international
responsibility).

Investment fund management in Germany is regulated by the Capital Investment
Code (KAGB), which entered into force on July 22, 2013.

The KAGB represents the implementation of additional financial market regulatory reforms, committed to in the aftermath
of the global financial crisis.

The law went beyond the minimum requirements of the relevant
EU directives and represents a comprehensive overhaul of all existing investment-related
regulations in Germany with the aim of creating a system of rules to protect investors while also
maintaining systemic financial stability.