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 at 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
UK inflation rate falls sharply to 0.5%
The UK inflation rate fell sharply to 0.5% in December, from 1% in
November, which is the joint lowest on record. Mark Carney, Bank of
England governor, said that low inflation could mean lower interest rates for
longer, although he said he still expected rates to "move up over the course
of the next couple of years". Economists said that a further fall seems likely
and that an outright drop in prices was possible, with a negative reading in
February. George Osborne said the sharp fall in the UK inflation rate should
not be feared and that “…We should not confuse this welcome news with the
threat of damaging deflation that we see in the eurozone". He said that the
UK could experience "a few months of very low or even negative inflation"
without any significant risk to the economy.
FCA updates AIFMD webpage on access to GABRIEL
The FCA has updated its AIFMD webpage on reporting and current access
to GABRIEL. As a way of background, the FCA states that AIFMs must
report transparency information in accordance with the pro-forma reporting
template (set out in the Annex IV of the AIFMD Delegated Regulation)
through its GABRIEL reporting system. The FCA states that it is aware that

2. some AIFMs have not yet been granted access to GABRIEL and that it is
prioritising efforts to ensure that all AIFMs have access to GABRIEL as
soon as possible and that it expects that all firms will be given the ability to
report within one month of the reporting period ending 31 December 2014
and that it will be able to grant access to a significant number of firms "by
the end of this week". It adds that it will update the webpage at the beginning
of next week and that firms should check the webpage regularly.
ESMA updates AIFMD Q&As
ESMA has updated its Q&A paper on the application of the AIFMD. The
new Q&A are all grouped under the heading of reporting to national
competent authorities under Articles 3, 24 and 42. The aim of the Q&A is to
promote common supervisory approaches and practices in the application of
the AIFMD and its implementing measures. The answers are also intended
to help AIFMs by providing clarity on the content of the AIFMD rules. The
Q&A were previously last updated in November 2014.
CRD IV capital buffer introduced
The Capital Requirements (Capital Buffers and Macro-prudential Measures)
(Amendment) Regulations 2015 have been published, which introduce a
capital buffer called the "systemic risk buffer" for banks, building societies
and investment firms. The buffer is intended to make such firms more
resilient to certain long-term systemic risks in the economy. The Financial
Policy Committee (FPC) will be responsible for setting out the framework
for determining which institutions should hold the buffer and, if so, how
large the buffer should be. It will need to publish this methodology by 31
May 2016. The PRA will be responsible for applying the framework and will
have ultimate discretion over which firms must hold the buffer and its size.
The Regulations were made on 12 January 2015 and come into force, unless
otherwise stated, on 31 May 2016. The systemic risk buffer is applicable
from 1 January 2019.
European Commission amends ITS on supervisory reporting under
CRR
The European Commission has published the texts of two Implementing
Regulations that it has adopted, that will amend the Implementing
Regulation on supervisory reporting of institutions under the Capital
Requirements Regulation (CRR). The Implementing Regulations relate to:
(1) Asset encumbrance, single data point model and validation rules; and (2)

3. Forbearance and non-performing exposures and certain minor amendments.
The European Banking Authority published final draft ITS on amendments
concerning the supervisory reporting of forbearance and non-performing
exposures under article 99(4) of the CRR in July 2014 and later that month it
published final draft ITS to make minor changes to templates and
instructions that were necessary to reflect some of the answers published in
the EBA's single rulebook Q&As as well as to correct legal references and
other clerical errors. The Implementing Regulation adopted by the
Commission appears to consolidate these draft ITS.
ESMA updates Q&As on ETFs and other UCITS issues
ESMA has updated its questions and answers paper (Q&A) on its guidelines
on exchange traded funds (ETFs) and other UCITS-related issues. The
Q&A, which are intended to promote common supervisory approaches and
practices in the regulation of UCITS, focus specifically on ESMA's
December 2012 guidelines on ETFs and other UCITS issues. New questions
and answers have been added to the sections of the Q&A dealing with
financial derivative instruments (Q&A 5f) and collateral management (Q&A
6n). The Q&A were previously last updated in March 2014.
ACER launches REMIT Portal
The Agency for the Co-operation of Energy Regulators (ACER) has
announced the launch on 8 January 2015 of the REMIT Portal. The REMIT
Portal is an online compilation of information and applications that ACER
has made available relating to the Regulation on wholesale energy market
integrity and transparency (REMIT). Among other things, the REMIT Portal
contains links to: (i) the European register of market participants; (ii) a list of
organised market places; (iii) a list of standard contracts; (iv) a list of
registered reporting mechanisms (RRMs); (v) a list of inside information
platforms; (vi) ARIS applications; and (vii) documentation relating to
REMIT, including ACER guidance documents. ACER states that, following
the launch of the REMIT Portal, reporting parties can start registering as
RRMs.
EU Council invites COREPER to approve MLD4
Political agreement was reached on the Fourth Money Laundering Directive
(MLD4) and the revised Wire Transfer Regulation (WTR) in December
2014. The Presidency of the Council has this week invited the Permanent
Representatives Committee (COREPER) to endorse the final compromise

4. texts. COREPER is also asked to approve, in principle, the submission (at a
later date) of the final compromise texts for political agreement and,
subsequently, for their adoption as the Council's first reading positions. The
approval would be conditional on the receipt of an offer letter from the
relevant European Parliament committees confirming that the final
compromise texts are acceptable to the Parliament and that, should the
Council adopt the agreed texts at first reading, the Parliament would not
adopt any amendments in its second reading.
RBS granted waiver from US foreign bank rules
Royal Bank of Scotland has been granted a waiver by the US Federal
Reserve from new rules for foreign banks with more than $50 billion of
assets in the US. RBS emerged as the weakest of the big five UK-based
banks in both the UK and EU stress tests last year and is expected to scale
back its US operations quickly enough to fall below the threshold level by
next year, when the new rules come into force. The rules will require banks
with holdings above the threshold to set up separately capitalised holding
companies and comply with tough local capital, leverage and corporate
governance rules.
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
16 January 2015