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
ESMA clarifies commodity derivatives definition under MiFID
ESMA has published final guidelines on the definitions of commodity derivatives and their
classification under C6 and C7 listed in Section C of Annex 1 to MiFID. The purpose of the
guidelines is to provide a common, uniform and consistent application of the definitions of
commodity derivatives until MiFID II comes into force on 3 January 2017. Currently there is no
single commonly adopted definition of derivatives in the EU under MiFID, particularly in the
case of physically settled commodity forwards. The existing different national applications of the
MiFID definitions are resulting in the inconsistent application of EMIR, which refers to the
MiFID commodity derivatives definition. The guidelines will clarify the definitions by specifying,
in particular, what is meant by "physically settled" and confirming that forwards traded on a
regulated market or multilateral trading facility (MTF) fall within the scope of MiFID. The
guidelines will apply from 7 August 2015.
FCA guide on MAR
The FCA has published a one minute guide to the Market Abuse Regulation (MAR) and has
made a MAR webinar available, for which online registration is required. The one minute guide
provides a summary of MAR's application and its key requirements. It includes a timetable for the
main forthcoming developments in relation to MAR. The webinar is a recording of a MAR
overview briefing given by the FCA's MAR policy team in March 2015. The FCA is expected to
consult, in autumn 2015, on amendments to the FCA Handbook following the introduction of
MAR. MAR will repeal and replace the existing Market Abuse Directive (2003/6/EC) with effect
from 3 July 2016.

2. Cross-sector risks facing EU financial system
The Joint Committee of the European Supervisory Authorities (ESAs) has published its fifth bi-
annual report on the risks and vulnerabilities in the EU financial system. Overall, the Joint
Committee has found that in the past six months risks affecting the EU financial system have not
changed in substance, but have further intensified. According to the report, the major risks
include: (i) low growth, low inflation, volatile asset prices and their consequences for financial
entities; (ii) deterioration in the conduct of business; and (iii) IT risks and cyber attacks. However,
despite the risks, a number of ongoing policy and regulatory initiatives, such as regulatory reforms
in the securities, banking and insurance sectors, and the European Commission's plan for
achieving a capital market union (CMU), are contributing to improving the stability and
confidence in the financial system, as well as facilitating additional funding channels to the real
economy.
IBA statement on LIBOR
ICE Benchmark Administration Limited (IBA), the LIBOR administrator, has published a
summary of feedback to its consultation on a position paper on the evolution and enhancement of
LIBOR. The feedback relates to the usage of LIBOR in specific currencies and tenors. The
summary of comments on the proposals relate to: (i) basing LIBOR on transactions; (ii) having a
waterfall of calculation methodologies; (iii) expanding the range of counterparties and expanding
the eligible transactions; (iv) standardising parameters for transactions; and (v) data embargo. The
information provided in the responses to the questionnaire indicates that all LIBOR currencies
and tenors are currently used extensively for a variety of purposes (including valuations, pricing
of loan products, pricing derivatives and swaps, re-setting floating rate instruments and
accounting). The IBA states that it has no plans to discontinue any LIBOR tenors or currencies.
ELTIF Regulation
The EU Council has published a revised text of the Regulation on European Long-Term
Investment Funds (ELTIF Regulation). The text appears to be a revised version of the text
published on 23 March 2015. The ELTIF Regulation was adopted by the Council on 20 April
2015 at first reading.
FCA policy update
The FCA has published its policy development update which summarises the publications that the
FCA proposes to publish. These include: (i) a consultation paper on the implementation of
UCITS V, due for publication in the third quarter of 2015; (ii) a policy statement to CP14/14 on
strengthening the alignment of risk and reward: new remuneration rules and a policy statement to
CP14/13 on strengthening accountability in banking: a new regulatory framework for individuals.
The publication date for each of these papers is stated as "TBC"; (iii) a consultation paper on
amendments to the Handbook following the introduction of the Market Abuse Regulation (MAR),
due for publication in October 2015 (previously listed as August 2015).

3. http://safemailer.safeserve.com/admin/index.php?Page=Newsletters&Action=View&id=4534[08/05/2015 10:26:52]
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
7 May 2015