On October 15, 2025, the German regulator, the Federal Financial Supervisory Authority (BaFin), issued a general administrative act ( Produktinterventionsmaßnahme – Allgemeinverfügung BaFin 15 October 2025 ) concerning turbo certificates. The measure aims to strengthen investor protection when trading these highly speculative leveraged products. The product intervention measure restricts the marketing, distribution and sale of turbo certificates to retail investors based in Germany.
In future, issuers, providers and intermediaries must display a standardised risk warning on marketing materials. Prior to purchase, intermediaries must conduct an assessment that tests investors’ knowledge of how turbo certificates work (‘basic knowledge of turbo certificates’) and repeat this assessment at least every six months. Additionally, no monetary or non-monetary incentives, such as reduced order fees or new customer bonuses, may be offered in connection with the purchase of these products.
Turbo certificates are financial instruments (as defined in Article 4(1)(15) in conjunction with Annex I, paragraph 1 of MiFID II) in form of bearer bonds that track the performance of an underlying asset on a leveraged basis and expire immediately upon reaching a specified knock-out threshold (a predetermined price value of the underlying asset). The products enable investors to participate disproportionately in the price movements of an underlying asset such as a share, an index or a currency. Investors typically pay only a fraction of the asset’s value, with the remainder financed by the issuer, thereby leveraging the investor’s capital investment. A fundamental feature of turbo certificates is the knock-out threshold, also known as the knock-out barrier. This is a fixed price level at which the certificate expires immediately. Reaching the knock-out threshold leads to an immediate total loss of the invested capital, regardless of whether or not the underlying asset subsequently develops in the direction expected by the investor.
BaFin can restrict or prohibit the marketing, distribution or sale of financial instruments if significant investor protection concerns exist under MiFIR (Article 42) and the German Securities Trading Act (Section 15 (1) sentence 2).
In June this year BaFin already announced that it is planning to restrict trading in turbo certificates. BaFin had previously conducted a study examining the market for turbo certificates. The study found that, between 2019 and 2023, around three out of four retail investors suffered losses on turbo certificates. BaFin expressed significant concerns regarding investor protection and criticised the high complexity of turbo certificates and the marketing and sales practices associated with these products.
Firms will need to implement the product intervention measures included in the general administrative act by June 16, 2026.