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. Claire Cummings 020 7585 1406 claire.cummings@cummingslaw.com

1. 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.
Claire Cummings
020 7585 1406
claire.cummings@cummingslaw.com
MiFID II
ECOFIN has confirmed the general approach on the MiFID II legislative
proposals which was published by the Presidency of the Council on 19 June
2013. ECOFIN called on the Presidency to start negotiations on the texts of
MiFID II and MiFIR with the European Parliament on the basis of the general
approach with a view to reaching an agreement at first reading.
FCA enforcement priorities
The FCA has stated that firms may see enforcement teams engaging much earlier
with issues, whether through formal action or working with supervisors and that
the FCA is committed to credible deterrence and will continue to focus on senior
management, including obtaining individual attestations where remedial action is
being taken. It indicated that if firms embed the FCA Principles for Businesses in
their approach, they "will not go far wrong". Priorities over the next year will
include a continuing focus on LIBOR, market abuse and insider dealing,
protection of client money and assets, mis-selling and remuneration structures.

2. Long-term investment funds regulation
The European Commission has published a draft legislative proposal for a
Regulation on European long-term investment funds (ELTIFs). The proposed
ELTIF is a new type of collective investment fund framework which will allow
individual and institutional investors to put money into companies and projects
that need long-term capital and is designed to increase the amount of non-bank
finance available for companies investing in the real economy of the EU. To
qualify as an ELTIF, the new fund must: (i) only be offered by managers who are
authorised under the AIFMD; (ii) only invest in certain types of assets and invest
at least 70% of the money in the fund in these assets; (iii) comply with rules on
spreading assets; (iv) strictly limit derivative use to manage currency risks, not
for speculation; (v) limit leverage; and (vi) run for a specified period of time
during which investors do not have the right to get their money back (which must
be clearly explained to investors). The Commission has also published related
FAQs, a draft impact assessment and a draft executive summary of the impact
assessment and, according to the Commission's webpage, final texts will be
available soon. The proposal will be presented to the European Council on 27
and 28 June 2013.
IOSCO final report on ETFs
The International Organization of Securities Commissions (IOSCO) published its
final report on principles for the regulation of exchange traded funds (ETFs). The
report contains nine principles that are intended to guide the regulation of ETFs
and foster industry best practices. The first section of the report focuses on ETF
classification and investor disclosure, including principles about differentiating
ETFs from other types of funds and exchange traded products. Other principles
encourage disclosures about ETF portfolios, costs and expenses, and ETF
strategies. The second section of the report addresses concerns about the
structuring of ETFs, including conflicts of interest and managing counterparty
risks.

3. Financial Stability Board update
The Financial Stability Board published a press release regarding its recent
meeting in Basel to discuss vulnerabilities currently affecting the global financial
system and ongoing FSB initiatives to strengthen global financial regulation.
Progress in this respect relates to the resolution of financial institutions, LIBOR
benchmarks, OTC derivatives reform, shadow banking and compensation
practices.
FIA and FIO announce affiliation
The Futures and Options Association (FOA) and Futures Industry Association
(FIA) have announced that they have reached an agreement in principle to
combine their two organisations under one global structure and brand called FIA
Global. It is proposed that the FOA will change its name to FIA Europe.
However, both organisations will continue to operate with their own leadership
and staff, separate boards of directors, and distinct membership.
CRD IV
The EU Council has adopted without discussion the proposed Capital
Requirements Regulation (CRR) and the proposed CRD IV Directive. CRD IV
will implement the Basel III reforms in the EU, as well as introducing certain
EU-specific reforms including imposing restrictions on bonuses. The legislation
is now awaiting publication in the Official Journal of the EU and the new rules
will come into force on 1 January 2014.

4. MAD II
The European Parliament will consider the proposed Regulation on insider
dealing and market manipulation (MAR) during its plenary session from the 9 to
12 September 2013. MAR, together with the proposed Directive on criminal
sanctions for insider dealing and market manipulation (CSMAD), make up the
MAD II legislative proposals that will replace the Market Abuse Directive.
CSD Regulation
The EU Council has published a progress report on the proposed Regulation on
improving securities settlement and central securities depositaries (CSDs), which
indicates that there are a number of outstanding issues requiring further debate.
These include settlement discipline and the flexibility allowed in the extension
period for failed buy-ins, third country regimes, authorisation of banking CSDs
and conflict of laws. The Presidency has published a compromise proposal
relating to the Regulation and the European Parliament will consider this in its
plenary session to be held from 9 to 13 December 2013.
IMPORTANT NOTICE – CUMMINGS LAW
We are pleased to announce that Cummings Law Ltd has been approved as a
firm of solicitors in England and will act as a successor practice to Cummings
from 1 July 2013. This means that from 1 July 2013 our legal services will be
provided by Cummings Law Ltd. The team working for our clients will remain
the same and we remain committed to providing a good service to all our clients.
If you have any questions, please do call Claire Cummings on 020 7585 1406.
Cummings
Tel: + 44 20 7 585 1406
Mob:+ 44 7734 057 327
www.cummingslaw.com
28 June 2013