BaFin supervises German credit institutions, insurers, and investment firms, and polices market abuse in German listed securities. Larger banks are supervised jointly with the European Central Bank under the banking union, so BaFin's bank work is shared rather than exclusive.
For traders it matters in two ways. German retail brokers and CFD providers are authorised by BaFin and follow the esma leverage and close-out regime. And BaFin enforces the EU mar-market-abuse-regulation, investigating suspicious trading and the disclosure of inside information by German issuers.
Its reputation was damaged by a large domestic accounting fraud, after which it was restructured with stronger forensic audit powers and a more interventionist supervisory culture.
Related: esma