Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services industry. If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.

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
MiFID II: FCA first consultation
The FCA has published its first consultation paper on the implementation of MiFID II (CP15/43).
CP15/43 focuses on areas where the FCA has sufficient certainty about the MiFID II legislation to
be able to make proposals for UK implementation. The proposals mainly cover changes to the
trading of financial instruments. They relate to matters including the following: trading venues,
systematic internalisers, transparency, market data, algorithmic and HFT requirements,
passporting and UK branches of non-EEA firms. The proposed Handbook text is set out in the
draft Markets (MiFID 2) Instrument 2016 in appendix 1 to the paper. Comments are invited by 8
March 2016.
MiFID II: ESMA publishes further draft ITS
ESMA has published further draft ITS under MiFID II, which relate to the following areas: (i)
standard forms, templates and procedures for cooperation arrangements in respect of a trading
venue whose operations are of substantial importance in a host Member State; (ii) format and
timing of communications relating to the suspension and removal of financial instruments from
trading on a regulated market, a MTF or an OTF; (iii) standard forms, templates and procedures
for the authorisation of data reporting services providers; (iv) position reporting and format and
timing of weekly position reports; and (v) various standard forms, templates and procedures for
national competent authorities. ESMA published two other sets of technical standards on the
implementation of MiFID II in June 2015.
EMIR draft RTS on access to data

2. ESMA is consulting on draft RTS relating to data access, and aggregation and comparison of data
under EMIR. ESMA proposes amendments to the current RTS in force on data access to allow
improvements to be made to allow the authorities to better fulfil their responsibilities, in particular
in the context of monitoring systemic risk and increased OTC derivatives transparency.
Comments are invited by 1 February 2016, following which ESMA will submit a final report to
the European Commission.
Draft Finance Bill 2016
The government is consulting on draft clauses and explanatory notes to be included in the
Finance Bill 2016. The draft legislation represents the majority of the measures to be included in
the Finance Bill 2016, and implements a number of tax policies, some of which were announced
in the 2015 Autumn statement. Measures include: (i) taxation of asset managers’ performance-
based rewards; (ii) bad debt relief on P2P lending; and (iii) changes to the bank levy. The draft
legislation is open for consultation until 3 February 2016. The final contents of the Finance Bill
2016 will be confirmed in the 2016 Budget, which is to be delivered on 16 March 2016.
FCA speech on fair and effective markets
The FCA has published a speech by David Lawton, FCA Director of Markets Policy and
International, on wholesale market policy. In his speech, Mr Lawton comments on some of the
more important market policy developments in 2015 and looks at how they might contribute to
the goal of fair and effective markets, and referred to, amongst other things on: (i) the proposed
delay to the MiFID II implementation date; (ii) the final delegated acts on dealing commission;
(iii) publication of the delegated acts on MAR; and (iv) an update on the FCA’s competition
market study.
FCA thematic review on confidential and inside information
The FCA has published a thematic review report on flows of confidential and inside information
(TR15/13). The review findings indicate that, although firms recognise the risks associated with
flows of confidential and inside information, further work is needed to ensure that these risks are
managed appropriately. The FCA states that it is essential for firms' senior management to take
note of the findings and messages outlined in the report, and take the steps necessary to identify
and resolve any outstanding issues. Firms must instil a culture in which market integrity is at the
heart of how they do business.
IOSCO third hedge fund survey
IOSCO has published the findings from its third hedge fund survey. The aim of the survey is to
gather data from hedge fund managers and advisers about the markets in which they operate, their
trading activities, leverage, funding and counterparty information. It forms part of IOCSO's work
to support the G20 initiative to mitigate risk associated with hedge funds. The report explains the
results of the survey and provides an overview of the hedge fund industry as at 30 September
2014. IOSCO considers that the regular collection and analysis of hedge fund data by regulators
remains an important building block in monitoring trends in the hedge fund sector and
understanding any potential systemic risks that hedge funds may pose to the financial system. As
a result, it aims to continue to conduct the survey on a periodic basis. The results of its second

3. hedge fund survey were published in October 2013.
FCA consults on social investments
The FCA has published a call for input on regulatory barriers relating to the social investment
market, asking for views about specific rules and policies that may be hindering investment for
social purposes. The FCA indicated that it would comment further on this sector in its March
2014 policy statement on crowdfunding. Social investment is a term used to describe investments
where the aim is to provide a wider social benefit, rather than the primary benefit being a purely
financial benefit to investors. They can include unlisted equity or debt securities issued by a
social enterprise, units issued by unregulated collective investment schemes (UCIS) and
traditional green or "ethical" investments. Comments are invited by 14 March 2016 and the FCA
will then consider any further actions it may need to take.
LIBOR update
ICE Benchmark Administration Ltd (IBA) has published an update following feedback to its
position paper regarding its proposals for the evolution of LIBOR. A recurring theme in the
feedback was that benchmark submitters should transmit eligible transaction data to IBA, rather
than submissions, and that IBA should calculate LIBOR rates from the transactional data. This
was seen as likely to result in a reduced need for subjectivity. IBA stated that it was important to
recognise that in the absence of sufficient transactions, some form of expert judgement will still
need to be exercised and the capacity of IBA to provide this will have to be carefully considered.
IBA intends to publish a further paper in early 2016.
Directors’ remuneration
The GC100 and Investor Group has published a statement relating to its guidance on directors’
remuneration. The Group has reviewed the guidance and 2014 Statement, particularly in the light
of experience over the 2015 AGM season and other developments. After due consideration, the
Group believes that the guidance, as supplemented by the 2014 Statement, continues to serve its
purpose effectively and will not be making any changes.
EBA recommends prudential regime for investment firms
The European Banking Authority has published a collaborative report with ESMA which lists a
series of recommendations that aim to provide a more proportionate and less complex prudential
regime for investment firms, based on appropriate risk sensitivity parameters. The main
recommendations of the EBA relate to: (i) a new categorisation of investment firms,
distinguishing between systemic risk and "bank-like" investment firms to which the full CRD IV
requirements should be applied, other investment firms ("non-systemic") with a more limited set
of prudential requirements, and very small firms with "non-interconnected" services; (ii) the
development of a prudential regime for "non-systemic" investment firms; and (iii) extending the
waiver for commodity trading firms until 31 December 2020.

4. http://safemailer.safeserve.com/admin/index.php?Page=Newsletters&Action=View&id=4876[18/12/2015 10:15:01]
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
18 December 2015