Legal shorts 09.05.14 including FCA’s new MiFID II webpages and FTT


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Legal shorts 09.05.14 including FCA’s new MiFID II webpages and FTT

  1. 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 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 FCA’s new MiFID II webpages The FCA has published a set of new webpages on MiFIR which are designed to help keep people up to date on developments relating to MiFID II. The webpages address a number of topics, including: (i) what firms will need to do; (ii), a summary of the significant changes proposed to the Markets in Financial Instruments Directive; (iii) the MiFID II legislative process; (iv) MiFID II implementing measures and transparency calculations; and (v) ESMA’s consolidated list of trading venue identification codes. Those interested in receiving MiFID II email updates from the FCA can register with the FCA via its website. FTT It has been reported that finance ministers from 11 eurozone countries plan to form a legal basis for a phased-in tax on financial transactions that would be implemented in 2016. Meanwhile, the German Finance Minister Wolfgang says a proposed tax on financial transactions in 11 eurozone
  2. 2. nations should first tackle shares and certain derivatives and in the UK, George Osborne has said that the UK is within its rights to challenge the FTT should it affect non-participating European countries. It is reported that the UK’s legal challenge might be backed by Sweden as its dissatisfaction with the proposal grows. The Swedish Finance Minister Anders Borg is quoted as saying "We did not support the U.K. when they started this legal case; we are much closer to doing that, because the process has not been satisfactory during these last few months." Agreement to MiFID II requested The Council of the EU has asked the Permanent Representatives Committee (COREPER) to confirm its agreement to the position on the MiFID II legislative proposals adopted at first reading by the European Parliament on 15 April 2014. The Council's requests concern the proposed MiFID II Directive and the proposed MiFIR. If the Council approves the Parliament's position, the legislative acts will be adopted, and after being signed by the President of the Parliament and the President of the Council, will be published in the Official Journal of the EU. The Council published the texts of the proposed MiFID II Directive and MiFIR on 1 May 2014 in advance of its formal adoption of MIFID II. Proposals for best practices for T2S markets' migration to T+2 On 6 May 2014, the ECB published proposals by the TARGET2-Securities (T2S) Harmonisation Steering Group (HSG) for best practices for T2S markets migrating to the T+2 settlement cycle on 6 October 2014. The HSG established a task force on T+2, whose primary aim is to ensure co- ordination across T2S regarding the change in settlement cycle and to minimise the impact of moving to T+2 for market participants. The proposals are set out in the following three sections: (i) Section 1 covers the scope of the T+2 settlement cycle; (ii) Section 2 focuses on the migration plans of markets to move to the T+2 rule; and (iii) Section 3 aims to provide some ideas in the context of the move to T+2 for the timely completion of the post-trade and pre-settlement activities, as well as the monitoring of matching timeliness and settlement fails. The ECB has also published a letter from the chairmen of HSG and T+2 task force to ESMA’s Head of Markets Division. Among other things, the letter states that in addition to the ECB, the HSG has also sent the proposals to ESMA and the European Commission for their consideration.
  3. 3. FCA Handbook Notice 11 Handbook Notice 11, setting out changes made to the FCA Handbook under instruments made by the FCA Board on 27 March and 1 May 2014, has now been published. FCA policy statement on competition in the markets for services provided by a regulated investment exchange The FCA has published a policy statement on competition in the markets for services provided by a recognised investment exchange (RIE) (PS14/6). The FCA has previously consulted, and the policy statement provides feedback on responses and sets out the changes to the FCA's Recognised Investment Exchange and Recognised Clearing House sourcebook (REC). One modification amends its proposed change to REC 6.7 (notification rules for overseas recognised bodies) to limit the scope of the obligation to events having a "material" effect on competition to bring this in line with the rule applicable to UK RIEs. The handbook instrument, which is included in an appendix to the policy statement, also provides that the change to REC 3.26G (proposals to make regulatory provision) comes into effect on 2 June 2014, giving UK RIEs some time to review and update their procedures for making notifications. The other changes to REC came into effect on 2 May 2014. HM Treasury review of FCA and PRA enforcement decision-making HM Treasury has published a press release announcing both the launch of a review of the processes for enforcement decision-making at the FCA and the PRA and a call for evidence. The call for evidence sets out the review's terms of reference and will consider the design and governance of the institutional arrangements and processes at the FCA and PRA. Items it will consider in "the key decision points" are those relating to: (i) the interface between supervision and enforcement, particularly the decision making process for referring cases for enforcement investigation and possible action; (ii) the approach adopted by the regulators to co-ordinating investigations and enforcement action; (iii) the arrangements for the subjects of enforcement action to understand the case against them and to make representations to the regulators; (iv) the operation of the settlement process, including the incentives for early settlement; (v) the operation of the post- investigation administrative processes for reaching disciplinary decisions in the FCA and PRA; and (vi) the review will consider the composition and accountability of the decision making committees, the degree of separation of the decision making process from the investigatory process and the
  4. 4. arrangements for referring cases to the Upper Tribunal. Responses are asked for by 4 July 2014. Designation of global systemically important reinsurers postponed to November 2014 The Society of Lloyd's has updated its webpage on systemic risk to report that it has recently been announced that the list of major reinsurers designated as systemically important has been further delayed from July 2014 to November 2014. The Lloyd's webpage states that the International Association of Insurance Supervisors has said that, whereas the methodology for the first nine global systemically important insurers focuses on non-traditional or non-insurance activities, for reinsurers the issues relating to substitutability and interconnectedness are more complex than for insurers and require further study and analysis. FCA publishes protocol and updated terms of reference for independent inquiry The FCA has published a press release announcing that the non-executive directors of the FCA board have published the protocol for the conduct of the independent inquiry into the handling of the FCA's March 2014 announcement of proposed supervisory work on the fair treatment of long standing customers in life insurance. This protocol sets out the procedures under which the inquiry is to be carried out, reflecting the requirement for the inquiry to be, and to be seen to be, independent. The non-executive directors have also published updated terms of reference. Markit IPO The press reports that London-based Markit has filed for an initial public offering in the US.
  5. 5. CYCLING SHORTS From Gavan McGuire from Centaur Fund Services: On the 10th of August 2014 I will compete and complete (I hope!!) the 100 miles of RideLondon Cycle Race to raise money for Great Ormond Street Hospital. I am very fortunate to have two wonderful and healthy children, however I am are aware that many parents have not been as lucky - I have an opportunity to help raise some much needed funds for GOSH and delighted too - as every little bit helps and if what I raise makes the difference to one person it will all be worthwhile. It will be no mean feat to haul my not too slim frame a 100 miles around the London roads and Surrey Countryside - I will be very grateful for every pound you donate. You can donate on: or by texting: GMCG99 £(the amount your wish to donate) to 70 070 Thanking you all very much in advance. Gavan McGuire Cummings Tel: + 44 20 7585 1406 Mob: + 44 7734 057 327 9 May 2014