Mr Caspari, at the end of March you began your well-deserved retirement. What were your feelings as you left BaFin?

As I took my leave, part of me was laughing and the other part crying. Crying because I will miss securities supervision with all its fascinating topics, but also the European dimension and the exchanges at the international level. It was always so stimulating. Also the people, my colleagues – I will miss them. But that’s life.

What about the part of you that was laughing?

I definitely will not miss all of the sudden surprises that the market likes to throw at us. Sometimes it’s like a lucky dip. Also, we are nearly drowning in a flood of European regulation. New rules are now coming so quickly that we can barely keep up: as we are still trying to implement one new law, the next regulation is already on its way. When you consider that the UCITS Directive was discussed for 20 years before finally being published in 1985 in the Official Journal – well today, the process of drafting and adopting a new directive is usually a matter of only one and a half years or even just a couple of months.

How did that happen?

It is the logical result of globalisation and technical progress: cross-border electronic trading has linked capital markets much more tightly. Supervisors must react and find solutions. But it is just as important to allow rules to stand for several years. Because, it is only with time that one can see how they will actually work. The fast pace of regulation also means that guidelines have to be technically refined after they have been published. This is done through regulations, technical standards and guidelines. However, it is important that this finely woven net of regulation can be complied with and that compliance can be monitored. Sometimes it’s pretty difficult to keep an overview – even for me, and I have been dealing with capital market regulation for nearly 35 years.

Over the course of the years, you have seen and achieved a lot. What stands out in your memory?

One of the most exciting challenges was definitely the Second Financial Markets Promotion Act in which capital market legislation and a corresponding supervisory institution were introduced in Germany for the first time in 1994. Ultimately, this brought about German securities supervision, thereby making BaFin even possible. At that time, as a Section Head at the Federal Ministry of Finance, I had the difficult task of convincing the federal states to partially transfer their supervisory responsibilities to the federal government. That cost me a lot of time, effort and power of persuasion; but it paid off in the end. I still look back fondly on my time working with colleagues from the states.

You were Deputy President of BaFin after its founding in 2002, and since April 2008 you have been Head of Securities Supervision. From your point of view, what have been the biggest challenges?

Generally speaking, it would have to be the financial markets crisis, the fallout of which we are still experiencing. It led to the creation of ESMA, as well as to the flood of new regulations we spoke about before. The goal is to make the markets more robust and improve their transparency. One important milestone along this way was the European Market Infrastructure Regulation (EMIR) of 2012. I also very clearly remember the ban on short-selling introduced in 2010. That was particularly challenging since we had to start from scratch and it had very far-reaching consequences. We were forced to struggle with finding the balance between putting a damper on overly ambitious trading and allowing the market the freedom required for liquidity. Strangling the market wouldn’t have helped anyone.

Let’s take a look into the future: what are going to be the toughest issues for your successor, Elisabeth Roegele?

Oh, there are plenty. Among other things, the MiFID II financial market guidelines and the Market Abuse Directive must be implemented. Regarding the product governance and product intervention rules of MiFID II, Ms Roegele’s practical experiences should pay off because she has an understanding of the issues from both sides. The AIFM Directive, on the other hand, has already been put into practice; here the focus will have to be re-directed to the market supervision of funds. Also, the Retail Investors Protection Act will be coming soon and should better protect the investor by improving transparency in the unregulated capital market. But it will also improve BaFin’s ability to promptly counteract market excesses – for instance thanks to the new ad hoc requirement for offerors of investments. Finally, there are challenges unrelated to new laws.

Which are those?

For example, securities supervision must continue to dedicate itself to the ongoing fight against market manipulation. An important international topic is the supervision of financial market infrastructures. The flood of European regulation and the ESMA will keep Ms Roegele on her toes. That great line from Casablanca, “We’ll always have Paris“, fits perfectly – ESMA is headquartered in the French capital.

What advice do you have for Ms Roegele?

Far be it from me to be giving out advice. When you take a position like that, the last thing you need is a predecessor with lots of advice. I have known Ms Roegele for more than ten years. She is extremely well prepared for her new role: she has excellent knowledge of the industry, the markets, and the administrative procedures within a supervisory authority. Here she will be able to fully utilize her well-rounded experience.

Will you continue to follow issues of securities supervision privately?

Certainly I will take a look at the ESMA website now and then to see what is happening. But you have to be able to let go. There are plenty of things I would like to do which I never had enough time for when I was working.

How would you like to spend the time?

I am really looking forward to focusing on my extensive collection of music from the ‘60s and ‘70s. Other than that, I will look after my health – and enjoy the freedom to just pick up and go travelling whenever I feel like it.

Anyplace in particular?

That is to be seen: wherever the wind takes me.

Mr Caspari, thank you for the interview and we wish you all the best.

Personal information: Karl-Burkhard Caspari

Executive Director of Securities Supervision until March 2015

Karl-Burkhard Caspari was the Executive Director of Securities Supervision and Vice President of BaFin until the end of March 2015. Additionally, he was a member of the Management Board of the European Securities and Markets Authority (ESMA) and of the International Organization of Securities Commissions (IOSCO).

Before joining BaFin, Caspari was employed for more than twenty years at the Federal Ministry of Finance – at first, and among other things, as an expert for stock exchange and securities law, including heading the sections for the management of debt of the former German Democratic Republic and stock exchange/investment law, until he ultimately became head of the directorate for banking, insurance, investments, stock exchanges and securities. He began his career as a lawyer at the Oberfinanzdirektion Nürnberg.