Euro shorts 23.05.14 including updated EMIR implementation Q&As and CC&G authorised under EMIR
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Euro shorts 23.05.14 including updated EMIR implementation Q&As and CC&G authorised under EMIR

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    Euro shorts 23.05.14 including updated EMIR implementation Q&As and CC&G authorised under EMIR Euro shorts 23.05.14 including updated EMIR implementation Q&As and CC&G authorised under EMIR Document Transcript

    • Welcome to Euro Shorts, a short briefing on some of the week’s developments in the financial services industry in Europe. If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers. Claire Cummings 020 7585 1406 claire.cummings@cummingslaw.com www.cummingslaw.com Updated EMIR implementation Q&As The European Securities and Markets Authority (ESMA) issued updated Question & Answers (Q&As) yesterday on the implementation of EMIR. Areas covered by the updated questions include: (i) the application of EMIR to AIFs; (ii) intra-group exemptions; (iii) treatment of non-EU non-exempt central banks; and (iv) segregation and portability and CCP organisational requirements. The latest set of EMIR implementation Q&As can be found at: http://www.esma.europa.eu/content/QA-VIII-EMIR-Implementation CC&G authorised under EMIR On 20 May the Bank of Italy authorized Cassa di Compensazione e Garanzia S.p.A. (CC&G) to operate as a central counterparty under EMIR. On the same date, the Bank of Italy approved the interoperability arrangement between CC&G and the French central counterparty LCH.Clearnet SA. Details will be available from the post-trading section of the ESMA Public Register in due course.
    • Government correspondence on shadow banking At a meeting on 1 April 2014, the EU Economic and Financial Affairs Sub- Committee of the House of Lords scrutinised a number of documents, including the European Commission's communication on shadow banking, having previously heard from the Commission Acting Director of Financial Markets and the Director, Competitive Markets of the Confederation of British Industry. The Chairman of the Sub-Committee then wrote to HM Treasury Financial Secretary outlining the evidence it had heard and setting out a number of questions, seeking the government's position. The letter of reply included the government's views on issues such as: (i) the definition of "shadow banking"; (ii) the overall effectiveness of the EU approach to shadow banking; (iii) the balance of responsibilities between the EU and the UK; and (iv) how the UK is regulating shadow banking and feeding into the EU discussions. This correspondence has now been published and is available at http://www.parliament.uk/documents/lords-committees/eu-sub- com-a/ShadowBanking/ShadowBankingCorrespondence.pdf. ESMA publishes second risk dashboard for 2014 ESMA’s second risk dashboard of the years reviews risk issues from 1 January 2014 to 31 March 2014 and includes reports that: (i) systemic stress indicators rose from a position of relative calm in EU financial markets, mirroring a re-emergence of heightened uncertainty at both global and EU levels; (ii) liquidity risk remained broadly stable, with signals continuing to be mixed; (iii) market risk rose as the uncertainties of an uneven recovery, and their implications for likely policy reactions, intensified at both global and EU levels; (iv) EU contagion risk remained broadly stable, though its nature appeared to shift; and (v) credit risk remained high, with the build-up of risks in new areas offsetting the continued improvement in others. CRD IV On 20 May 2014 three European Commission delegated Regulations which supplement the CRD IV Directive with regard to certain regulatory technical standards have been published in the Official Journal of the European Union (OJ). They provide supplements on the following issues: (i) Delegated Regulation 524/2014 specifies the information that competent authorities of home and host member states supply to one another; (ii) Delegated Regulation 527/2014 specifies the classes of instruments that adequately reflect the credit quality of an institution as a going concern and are appropriate to be used for the purposes of variable remuneration; and (iii) Delegated Regulation 530/2014 further defines material exposures and
    • thresholds for internal approaches to specific risk in the trading. The delegated Regulations all come into force twenty days after their publication in the OJ. CRR On 20 May 2014 five European Commission delegated Regulations which supplement CRR with regard to certain regulatory technical standards were published in the Official Journal of the European Union (OJ). They provide supplements on the following issues: (i) Delegated Regulation 523/2014 determines what constitutes the close correspondence between the value of an institution's covered bonds and the value of the institution's assets; (ii) Delegated Regulation 525/2014 deals with the definition of market; (iii) Delegated Regulation 526/2014 determines proxy spread and limited smaller portfolios for credit valuation adjustment risk; (iv) Delegated Regulation 528/2014 supplements the CRR deals with non-delta risk of options in the standardised market risk approach; and (v) Delegated Regulation 529/2014 assesses the materiality of extensions and changes of the internal ratings based approach and the advanced measurement approach. The delegated Regulations come into force twenty days after their publication in the OJ. European Commission objections to euro interest rate derivatives cartel investigation The European Commission has sent a statement of objections to three banks for their suspected participation in the euro interest rate derivatives (EIRDs) cartel, being concerned that the three banks may have colluded to influence the pricing of EIRDs. Four other banks have admitted involvement in the cartel and the Commission has settled with them and impose fines. Finance Bill 2014 The Finance Bill 2014 has been carried-over in the House of Commons from the 2013-14 session to the 2014-15 session. This means that the Bill will resume progress in the new session without having to start from the beginning. The State Opening for the 2014-15 session will take place on 4 June 201 and the Committee stage resumes on 10 June 2014. The Bill is now referred to in Parliament as the Finance (No.2) Bill 2013-14 to 2014-15
    • OECD report on regulatory best practice principles The OECD has published a report on best practice principles for regulatory policy on regulatory enforcement and inspections, stating that it considers inspections to be one of the most important ways to enforce regulations and to ensure regulatory compliance. The report, seeks to build an overarching framework to support initiatives on improving regulatory enforcement through inspections, making them more effective and efficient, while also less burdensome for those who are inspected. It sets out principles to help countries to reform inspections and develop cross-cutting policies on regulatory enforcement. The principles set out in the report have the informal status of guidance approved at the regulatory policy committee level and thus have the formal status of a "soft law" and are not binding for OECD countries. However, they will be used by the OECD Secretariat when reviewing regulatory policy in member and non-member countries. FATCA The Law Society of England and Wales, the Society of Trust and Estate Practitioners (STEP), and the Institute of Chartered Accountants in England and Wales (ICAEW) have jointly published updated guidance on reporting requirements under FATCA. A separate guidance note for managers of professional firms looks at the impact which FATCA compliance will have on internal procedures and explains how to obtain a global intermediary identification number for FATCA. Cummings Tel: + 44 20 7585 1406 Mob: + 44 7734 057 327 www.cummingslaw.com 23 May 2014