Legal shorts 10.07.14 including FCA consults on competition review and European Commission publishes new webpage for financial services
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Legal shorts 10.07.14 including FCA consults on competition review and European Commission publishes new webpage for financial services

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Legal shorts 10.07.14 including FCA consults on competition review and European Commission publishes new webpage for financial services Legal shorts 10.07.14 including FCA consults on competition review and European Commission publishes new webpage for financial services Document Transcript

  • 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 FCA consults on competition review The FCA has published a consultation paper to review competition in the wholesale securities and investment markets. The review also covers related activities such as corporate banking and focuses on wholesale activities within the investment chain. The consultation aims to identify any areas which might require further investigation through an in-depth market study. The consultation paper includes a section on the cost of equity and debt underwriting, taking into account in particular the fact that MiFID II will introduce a number of requirements on firms that engage in underwriting and placing to increase transparency and address conflicts of interest that can arise in the provision of such services. The FCA also outlines some areas where it considers that there may be competition issues and invites evidence on these and any other areas where competition may be weak and not working properly. The deadline for responses is 9 October 2014. If the FCA determines that any market study is needed, it intends to launch the study in early 2015.
  • European Commission publishes new webpage for financial services The European Commission has published a new webpage relating to Level 2 legislative measures for financial services. The webpage links to a new table (dated 1 July 2014) that sets out an overview of level 2 legislative measures in the area of financial services, both those in preparation and those that have been adopted. The table has been put together by the Commission's Internal Market and Services Directorate General (DG MARKT). According to the website, the table will be regularly updated. Benchmark manipulation The House of Commons Treasury Committee has published evidence given by the FCA on benchmark manipulation. David Bailey, FCA Head of Markets Intrastructure and Policy commented that all benchmarks are susceptible to a variety of conflicts of interest and it is very important that the process by which they are fixed is robust and has the appropriate governance and oversight, adding that the FCA is currently conducting a review of the systems and controls of submitting banks. Also giving evidence was Finbarr Hutcheson, president of ICE Benchmark Administration (IBA), which is the current administrator of the LIBOR benchmark. He said that he was very confident that there is no current manipulation of LIBOR, in view of the robust written procedures and surveillance mechanism put in place by IBA, and that IBA will shortly be publishing a consultation on one element of a policy it is implementing to identify exactly how IBA, as LIBOR administrator, will behave in certain circumstances to provide certainty for LIBOR users. EBA opinion on virtual currencies The European Banking Authority has published an opinion on virtual currencies. The opinion concludes that there are some potential benefits from virtual currencies, such as faster and cheaper transactions, as well as increased financial inclusion, but that the risks outweigh potential benefits and are described as manifold. More than 70 risks have been identified, including risks to users, risks to non-user market participants, risks to financial integrity (such as money laundering and other financial crime), risks to existing payment systems in conventional currencies and risks to regulatory authorities. The EBA considers that a regulatory approach to address these risks will require a substantial body of regulation the EBA advises national authorities to discourage credit institutions, payment institutions and e-money institutions from buying, holding or selling virtual currencies.
  • IOSCO transcript of July 2014 board meeting IOSCO has published a transcript of its July 2014 board meeting, which included discussion of the following points: (i) IOSCO’s policy development projects, which include setting risk mitigation standards for non-centrally cleared derivatives, assessing the implementation of its recommendations on securitisation and money market funds and developing methodologies to identify and regulate SIFIs in its regulatory ambit; (ii) progress on developing a toolkit of measures for IOSCO members to regulate cross border activity in the securities markets; and (iii) key priorities over the next 12 months, which will focus on developing appropriate responses to emerging risks that threaten the role markets play in driving economic growth. HM Treasury issues advisory notice on AML and CTF HM Treasury has published a revised advisory notice on money laundering and terrorist financing controls in overseas jurisdictions. The notice constitutes advice issued by HM Treasury about the risks posed by unsatisfactory anti-money laundering (AML) and counter-terrorist financing (CTF) controls in a number of overseas jurisdictions. In response to two statements published by FATF on 27 June 2014, HM Treasury advises firms to: (i) apply enhanced due diligence (EDD) measures in respect of certain jurisdictions named in the notice as high risk for the purposes of the Money Laundering Regulations 2007; and (ii) take appropriate action in relation to certain other jurisdictions named in the notice to minimise the associated risks, which may include EDD measures in high-risk situations. GUEST SHORTS This week David Bailey, chief executive officer at Augentius Depositary Company Limited, updates us on Augentius’ authorisation as a depositary under the AIFMD, as follows: “As the 22 July AIFMD looms, there is still a dearth of fully authorised depositaries. Augentius Depositary Company Limited received its authorisation from the FCA this week to act as a depositary in accordance with the AIFMD and is one of a very few fully authorised private equity and real estate depositaries. Unless the deadlines are moved, which is unlikely, it is important that managers ensure they are working with authorised depositaries. Augentius has worked hard to create a sophisticated but non-intrusive
  • depositary capability, whilst at the same time ensuring that all the oversight requirements as set out by the AIFMD are fully and properly met. Augentius Depositary is a stand-alone business and is segregated from Augentius’ fund administration business. Augentius is already acting for a number of fund management groups and sees depositary work as an increasingly important aspect of the services it provides to private equity and real estate managers around the globe. As the AIFMD becomes fully implemented, it will not only affect EU managers but others wanting to raise funds from European investors. The industry has already seen changes in national private placement regimes, some of which require the appointment of an EU depositary and Augentius is already working with non-EU managers to provide these services.” For more information on the above or any fund management services provided by Augentius, please contact David Bailey at david@augentius.com. Cummings Tel:+44 207 585 1406 Mob: + 44 7734 057 327 www.cummingslaw.com 11 July 2014