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When you evaluate an online broker in Germany, one critical question often gets overlooked: what type of authorization does this broker actually hold? Anyone wishing to provide certain banking and financial services in Germany requires authorisation from BaFin, and the type of authorisation required depends on the planned business model and the legal and actual design of the planned products and services.
That distinction matters far more than many investors realize. A broker authorized under one regime may be legally prevented from offering certain services that a broker under a different regime can provide. Understanding this shapes your evaluation of what you can actually do with that broker.
Anyone wishing to conduct banking business in Germany commercially or on a scale which requires commercially organised business operations needs prior written authorisation from BaFin in accordance with section 32 (1) sentence 1 of the German Banking Act (Kreditwesengesetz – KWG). Banking business includes deposit business, lending business, and principal broking business.
The KWG authorization is broader and allows an institution to accept customer deposits and offer a wider range of banking services. If a broker holds a full banking license under the KWG, it can conduct investment services and banking business. This is the most comprehensive authorization type.
Not every broker needs a full banking license. Anyone wishing to conduct forms of investment services in Germany commercially or on a scale which requires commercially organised business operations needs prior written authorisation from BaFin in accordance with section 15 (1) of the Investment Firm Act (Wertpapierinstitutsgesetz - WpIG). Investment services include principal broking business, investment broking, and investment advice.
A WpIG authorization under MiFID II is more focused. The broker is authorized specifically for investment services, not deposit-taking. WpIG takes precedence unless the institution conducts underwriting, proprietary trading or proprietary business and exceeds €30 billion in assets — in which case the KWG applies.
The authorization type directly limits what a broker can legally do. A broker authorized only for investment broking cannot accept deposits or offer lending. Conversely, a KWG-licensed bank can do both. When comparing brokers, you should verify:
You can check a broker's actual authorization scope by visiting BaFin's register and searching for the firm's legal name. The register will show exactly which services the broker is authorized to provide.
StockBrokerAnalyzer.com exists to help investors understand how to evaluate brokerage platforms using publicly available information, and unlike casual broker reviews, focuses on how the brokerage industry actually works—regulation, investor protection, account operations, and the mechanisms that matter to your money. Authorization type is one of those mechanisms: it determines the legal boundaries of what a broker can offer and how they must protect you.
When evaluating a broker, understanding the difference between a KWG bank and a WpIG investment firm is foundational. It tells you what the broker is legally permitted to do, which directly shapes the protections available to you and the services you can access.
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Analysis, not investment advice.
