Euro shorts 1.11.13 including how to start a fund and the uk's declining tax rate


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Euro shorts 1.11.13 including how to start a fund and the uk's declining tax rate

  1. 1. Welcome to Euro Shorts, a short briefing on some of the week’s developments in the financial services industry in Europe. 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 How to start and build a fund At a seminar this week, Claire Cummings joined Johnny Moulsdale of Rees Pollock and Nancy King of Portman Compliance to give a short talk on the basic UK and offshore steps for starting and building a fund manager and fund. A short video of all the talks will be made available next week on CLTV (Cummings Law Television, which is found at EU – US free trade agreement The hopes of Michel Barnier, the EU Internal Market Commissioner, to finalise the Transatlantic Trade and Investment Partnership (an EU-US free trade agreement) by the end of the year may not come to fruition. Mr Barnier has warned that negotiations may be halted unless a common approach on regulation can be agreed, including mutual recognition of each other's rules. London calling? A provider of deepwater oil drilling rigs is moving headquarters from Baar to London and is believed to be one of a number of businesses attracted by London’s talented workforce, easy airline connections from Heathrow, and declining corporate taxes. A senior adviser at investment bank Evercore
  2. 2. Partners in London has been quoted as saying “There is definitely a swing back to the UK under way, and I think there will be more. There are huge advantages: You have a vast talent pool, infrastructure, language, and lowered tax rates.” The UK’s base corporate tax rate is 23%, down from 28% in 2010 and will fall again, to about 20%, in 2015. This compares roughly with reported rates of 29% in Germany and about 3% in France. London’s FX calling industry also calling? At the same time, the UK is reported as rising to the challenge in forextrading regulation and coping with increasingly more foreign companies offering currency trading in Britain, while they are subject to regulation only by their home country. FCA and the future of the industry Martin Wheatley, FCA Chief Executive, has given a speech on shaping the future in asset management in which he called for greater transparency in asset management to boost its reputation, and an open discussion on how and where dealing commission is spent. He also commented on: (i) regulations, saying that the FCA will be working with asset managers in the UK and policy makers in Europe to find a balanced regulatory solution; (ii) conflicts of interests, stating that the FCA will conduct a thematic review following up on previous work; and (iii) examining bundled brokerage arrangements and looking at buy-side and sell-side practices. He confirmed that the FCA plans to publish a consultation paper in November seeking views on how to improve the use of dealing commissions and focusing on providing clarity around how "research" is defined, and what the FCA considers to be eligible and non-eligible when purchasing goods and services from clients' dealing commissions. AIFMD passporting The FCA has published new Q&A webpages on the AIFMD passporting process. The webpages are: (i) Q&A relating to full scope AIFMs managing authorised AIFs; (ii) Q&A for full-scope AIFMs; (iii) Q&A for full scope UK AIFMs marketing AIFs; and (iv) general information.
  3. 3. ESMA RTS ESMA has published a list of responses to its July discussion paper on its draft RTS under CRA III Regulation. Respondents include the Association for Financial Markets in Europe and number of credit rating agencies. Details can be found on EMIR The FCA has published two factsheets relating to EMIR and the Regulation on OTC derivatives, central counterparties and trade repositories. The first is a factsheet for financial counterparties (FCs) subject to the EMIR requirements for timely confirmation and bilateral risk mitigation and summarises the FCA’s findings from discussions it held with FCs this summer to identify challenges for market compliance with the timely confirmation and bilateral risk mitigation requirements for OTC derivative contracts under EMIR. The second factsheet is for those non-financial counterparties (NFCs) which are subject to EMIR and gives information on a review by the FCA into how NFCs have been defining their hedging activity and monitoring their status against the clearing threshold. This factsheet also discusses certain challenges of complying with EMIR. Italy - Amended decree on FTT The Italian Ministry of Economy and Finance has approved a decree ('the New Decree') clarifying important aspects of the application of the FTT on derivatives and equities. No amendments or clarifications are provided with respect to the additional levy which applies to “high frequency trading”. This decree was published in the Italian Official Gazette on 20 September 2013 and entered into force on 5 October 2013, other than provisions on non-capital protected bonds and debt instruments (including non-capital protected structured notes) which come into force on 1 January 2014. Spain - tax rates for non-residents Spain's draft 2014 Budget extends the application of increased tax rates on Spanish source income derived by non-Spanish residents with no permanent establishment in Spain. General tax will continue at 24.75%, and tax on dividends and interest will be fixed at 21% and capital gains will continue to be taxed at a 21% tax rate.
  4. 4. GUEST SHORTS This week, Wall Street attorney Stephen A. Bornstein reports on the FCA's recent announcement regarding the warning of investors about targets of ongoing securities fraud investigations: “Until now, the UK’s financial regulator publicly revealed the identities of alleged securities violators only after it had made the decision to impose a penalty or initiate a proceeding. The newly-established Financial Conduct Authority, however, has just announced that it intends to publicly disclose warnings sent to suspected wrongdoers – firms and individuals — that they can expect enforcement actions against them. The purpose of the new initiative is to put investors on notice of putative fraud so as to prevent any further harm. Targets apparently would be given the opportunity before their warnings are published to persuade the FCA that publication would be unfair. According to one UK legal observer, “the FCA … knows that the crowd only gathers when there is a body in the stocks.” Stephen's law practice is described at and his blog posts on legal and regulatory developments in the global financial services industry appear at Cummings Tel: + 44 20 7585 1406 Mob: + 44 7734 057 327 1 November 2013