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Euro shorts 13.12.13 including marketing in the uk under aifmd


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Euro shorts 13.12.13 including marketing in the uk under aifmd

  1. 1. Trouble viewing this email? Read it online 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 AIFMD: ESMA updates MoU table ESMA has updated its table showing the current state of play of memoranda of understanding (MoUs) signed by EU national supervisors with non-EU regulators worldwide in respect of the AIFMD. The AIFMD MoUs are cooperation agreements that allow the exchange of information between EU and non-EU supervisors, enabling non-EU fund managers to market alternative funds within the EU. According to the table, the FCA has entered into MoUs with all non-EU regulators listed in the table. AIFMD: FCA update on NPPR The FCA has updated its webpage on the national private placement regime under the AIFMD. The FCA considers that the references to non cooperative country and territory (NCCT) in the AIFMD should be interpreted as a reference to a jurisdiction that appears in either part of the FATF list of high-risk and non co-operative jurisdictions. The private placement regime broadly allows the marketing of AIFs that are not allowed to be marketed under the AIFMD domestic marketing or passporting regimes. However, to be able to market under the regime, a number of conditions need to be met, including a condition about AIFs and AIFMs not being established in an NCCT.
  2. 2. Bank bailouts EU lawmakers have proposed a draft law requiring bondholders and large savers to make good losses incurred by a failing European bank. This follows the hardline approach taken earlier this year in respect of big depositors in Cyprus, where the country’s bailout inflicted huge losses on wealthy savers. It was also agreed to accelerate the introduction of the regime by two years to 1 January 2016. The law now goes to EU ministers for approval next week. If approved, the regime will lay down clear rules for closing a bank in any of the EU Member States, with the aim of sparing taxpayers from further bailouts. Derivatives markets rebound in 2013 A panel of industry experts meeting in London this week consider that 2013 has seen an upturn in the derivatives markets and that participants can expect even better in 2014. Volumes have risen and increasing flows of business has been seen and it is thought that the recovery is due in part to improved clarity surrounding regulations. It was noted that, while 2013 has been a good year, trade reporting requirements being introduced under EMIR are a pressing issue moving into the New Year. Most institutions had apparently expected there to be a delay in the introduction of reporting and it is believed that many of them will not be ready by the implementation date in February. CRD IV The government has published the Capital Requirements (Country-byCountry Reporting) Regulations 2013, which implement provisions of CRD IV in the UK. The Regulations implement Article 89 which requires firms to disclose certain information annually on a consolidated basis by each country where they have an establishment. This information includes the nature of the firms' activities, the number of their employees, their turnover, profit or loss before tax and tax on profit and loss. The PRA will enforce the Regulations for PRA-authorised firms and the FCA will enforce them for all other firms within the scope of the CRD IV Directive. The Regulations come into force on 1 January 2014.
  3. 3. UCITS V The Presidency of the EU Council has published an addendum to its note to COREPER relating to the EC’s legislative proposal on UCITS V. The note related to the EC’s general approach to UCITS V and was originally published on 3 December 2013. The addendum includes the UK’s concern that Article 52(1) of UCITS V could artificially discriminate against the use of OTC derivatives that are cleared through central counterparties (CCPs). This issue is of concern because EMIR introduces clearing obligations requiring standardised OTC derivatives to be cleared through CCPs. This could discriminate in favour of exchange-traded derivatives and noncentrally cleared derivatives. CIMA corporate governance statement The Cayman Islands Monetary Authority released its Statement of Guidance for Regulated Mutual Funds last week. According to the Statement, CIMA has now formally adopted fund governance standards based on the Weavering principles and other international standards. The most important development is that CIMA has now imposed a minimum requirement for board meetings to be held "at least twice per year"; previously, there was no legal minimum requirement for the frequency of board meetings. IMA on outsourcing by managers The Investment Management Association has published a response from the Outsourcing Working Group (OWG), which was formed in response to the FSA’s CEO letter on asset managers’ outsourcing arrangements. The OWG sets out guiding principles and considerations that asset managers should take into account depending on the nature, size and scope of their outsourced arrangements, requiring firms to: (i) have a full understanding of arrangements so that they can manage and oversee the relationship with service providers; (ii) have a comprehensive exit plan to enable the transition from one outsourcing service provider to another; and (iii) focus on terminology and documentation, data interfaces and testing methodologies.
  4. 4. Financial Transaction Tax The 11 EU Member States who have signed up to the tax met this week to consider narrowing the FTT’s scope to shield pensions, government debt and other markets instrumental in keeping the economy going. The meeting will also consider conflicting opinions on the legality of the original proposal, which is being challenged by the UK in the EU courts. According to an EU document prepared by the Lithuanian presidency, several key issues are slated for discussion to provide ‘guidance for further work on the proposal’, indicating that any tax which emerges from the negotiations is likely to be less ambitious than originally planned. ISDA standard margin calculations ISDA is progressing with plans to standardise initial margin calculations which should provide greater transparency around uncleared swaps to regulators. ISDA has identified five important assumptions requiring agreement: (i) the general structure of margin calculations; (ii) the requirement for margin to meet a 99% confidence level over a 10-day standard margin period of risk; (iii) model validation; (iv) the use of portfolio risk sensitivities; and (iv) the use of collateral haircut calculations. The model would also have to meet several general criteria, such as efficiency, speed, transparency, non-procyclical, be governable and not restrict market access. Cummings Tel: + 44 20 7585 1406 Mob: + 44 7734 057 327 13 December 2013