Welcome to Legal Shorts, a short briefing on some of the week’s developments
in the financial services industry.
If you wo...
Long-term investment funds regulation
The European Commission has published a draft legislative proposal for a
Regulation ...
Financial Stability Board update
The Financial Stability Board published a press release regarding its recent
meeting in B...
MAD II
The European Parliament will consider the proposed Regulation on insider
dealing and market manipulation (MAR) duri...
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Legal shorts 28.06.13

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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


Published in: Economy & Finance, Business
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Legal shorts 28.06.13

  1. 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. 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. 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. 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

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