1. Welcome to Legal Shorts, a short briefing on some of the week’s developments in
the financial services industry.
Listen to this week's Legal Shorts on CLTV by going to
http://vimeo.com/cummingslaw
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
Risks of firms using free secondees
Martin Wheatley, FCA Chief Executive, has reported to the House of
Commons Treasury Committee on the issue of secondment risk. The FCA
has looked at ten regulated firms across the retail and banking and asset
management sectors to assess the risk of a conflict of interest arising from
regulated firms taking on free (or low cost) secondees from consultancy or
professional firms (such as, firm advisers and accountancy firms). The FCA
has concluded that this does not appear to be widespread in the two sectors
assessed, and the FCA has found no direct link to customer detriment. As a
result, the FCA does not intend to continue any further specific supervision
activity on the issue.
FSB requests assistance for FX benchmark reforms
The Financial Stability Board has requested assistance from the London
Foreign Exchange Joint Standing Committee (FXJSC) in implementing FSB
recommendations for FX benchmark reforms. The FSB has asked the
FXJSC to assist in monitoring market participants' progress in implementing
FSB recommendations and, specifically, the FXJSC is asked to report on
progress on recommendations 6 to 13 from the FSB's September 2014 report
on FX benchmarks. The report is requested by 31 July 2015. It is expected
that the FSB will publish an assessment of progress in implementing its
recommendations ahead of the G20 leaders' summit in November 2015.

2. IOSCO consults on business continuity
IOSCO has published two consultation papers that aim to enhance the
ability of financial markets and intermediaries to manage risks, withstand
catastrophic events, and swiftly resume their services in the event of
disruption. The first consultation provides background on trading venues,
their robustness and their business continuity plans and recovery planning,
particularly in the light of market disruptions that have occurred in some
jurisdictions. The consultation proposes sound practices that should be
considered by trading venues in developing and implementing risk
mitigation mechanisms. The second consultation concerns market
intermediaries and proposes sound practices that regulators could consider
as part of their oversight of market intermediaries and which intermediaries
may find useful. Both consultations close on 6 June 2015.
European Parliament to consider proposed Benchmark Regulation
The European Parliament has updated its procedure file on the proposed
Benchmark Regulation. The procedure file now indicates that the Parliament
will consider the proposed Benchmark Regulation during its plenary session
to be held from 18 to 21 May 2015. The procedure file had previously
indicated that the Parliament would consider the legislative proposals in the
plenary session to be held from 7 to 10 September 2015. The European
Commission published the proposed Benchmark Regulation on 18
September 2013.
FSB work plan for 2015
The Financial Stability Board has discussed its work plan for 2015, which
covers the following areas; (i) market liquidity - it has agreed a work plan to
identify financial stability risks associated with market liquidity in fixed
income markets and asset management activities, as well as longer-term
structural financial stability issues; (ii) market-based finance - it will
consider responses to the FSB’s consultation on standards relating to the
application of numerical haircut floors to non-bank to non-bank
transactions; (iii) market conduct issues, including considering whether
reforms to risk governance, compensation and benchmarks have helped to
reduce misconduct and whether any additional measures are needed; (iv)
ending too-big-to-fail; (v) systemically important banks; and (vi) data gaps.

3. Development of digital currencies
Following its call for information on digital currencies, HM Treasury has
issued a response outlining the government’s objectives for the sector and its
next steps. The government is generally supportive of the development of
digital currencies and considers that the risks posed to monetary and
financial stability in the UK by digital currencies are currently low. It has
not yet finalised its definition of digital currencies but intends to do so when
publishing proposed regulations. The government intends to encourage
innovation whilst preventing the use of the technology and currencies for
criminal purposes and plans to make current AML regulation apply to
digital currency exchanges. The government intends to issue a full
consultation on the proposed regulatory approach early in the next
Parliament, subject to the outcome of the general election.
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
10 April 2015