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
AIFMD Annex IV reporting
The FCA has published Q&As containing information on reporting under Annex IV of the
AIFMD. The aim of the Q&As is to make it easier for firms to submit accurate, consistent and
complete data and they are relevant to full-scope UK AIFMs, small authorised UK AIFMs, small
registered UK AIFMs, above-threshold non-EEA AIFMS and small non-EEA AIFMs marketing
in the UK under the national private placement regime (NPPR). The Q&As: (i) cover aspects of
transparency reporting where questions have been misinterpreted by some AIFMs; (ii) identify
where AIFMs have provided inconsistent responses to connected questions; and (iii) provide
further information on the general use and functionality of GABRIEL.
AIFMD and UCITS V: remuneration guidelines
ESMA is consulting on guidelines on sound remuneration policies under both the AIFMD and
UCITS V. The amendments to the AIFMD relate to the guidelines for AIFMs being part of a
group. The proposed UCITS V guidelines are based on those already issued on remuneration
under the AIFMD, as the UCITS V remuneration principles broadly reflect those under the
AIFMD. In developing the guidelines, ESMA co-operated with the European Banking Authority
with a view to aligning guidance on remuneration policies across the financial sector. Comments
are invited by 23 October 2015. ESMA aims to publish the final version of the UCITS
remuneration guidelines together with a final report by the first quarter of 2016, ahead of the
UCITS V transposition deadline of 18 March 2016. The final report is expected to include the
final revised AIFMD remuneration guidelines.

2. New FCA forms for senior managers regime
The FCA has updated its future Handbook forms and templates webpage with details of new and
amended Handbook forms due to take effect on 7 March 2016 as part of the new senior managers
regime (SMR).
OTC derivatives reform
The Financial Stability Board has published its ninth report on progress made by standard-setting
bodies, national and regional authorities and market participants towards meeting the G20
commitments for reforms to global OTC derivatives markets. The report finds that
implementation of the reforms is well underway, with the foundational authority needed to give
effect to the full range of these reforms in most FSB member jurisdictions. The report notes that:
(i) implementation of reforms is most advanced for trade reporting and for higher capital
requirements for non-centrally cleared derivatives; (ii) there has been further incremental progress
to promote central clearing of standardised OTC derivatives; (iii) few jurisdictions have
regulatory frameworks in place to promote execution of standardised contracts on organised
trading platforms; and (iv) most jurisdictions are only in the early phases of implementing the
joint IOSCO and BCBS framework for margin requirements for non-centrally cleared derivatives.
FCA speech on FEMR
Tracey McDermott, FCA director of supervision (investment, wholesale and specialists) has
commented on the Fair and Effective Markets Review (FEMR) in a recent speech in relation to
the FCA's role and what is expected from firms. Key aspects of the FCA's strategy are how to
make the most effective use of resources in the wholesale sector and how to create a system in
which individuals are held accountable for their actions. With regard to the latter, the FCA
considers that the introduction of the senior managers regime (SMR) will place responsibility for
good conduct into a firm's governance. As regards what is expected from firms, FEMR sets out
five conduct questions, which are intended to give firms a "sense of what good looks like". In
analysing the questions, Ms McDermott remains concerned that firms are not reading across the
root causes of misconduct and explains that the FCA expects firms to be asking themselves how
they are encouraging their employees to be and feel responsible for actually managing the
conduct of their business.
Code of conduct in FX markets
The BIS has announced that the Foreign Exchange Working Group (FXWG) has been established
to strengthen code of conduct standards and principles in the FX markets. The FXWG has
commenced two workstreams, namely: (i) drafting a new single global code of conduct by
harmonising common elements of existing FX codes, as well as drafting new principles for those
areas not adequately covered in existing codes; and (ii) developing proposals to promote and
incentivise adherence to the new single global code of conduct. The target date for finalising the
code, as well as the proposals to ensure greater adherence, is May 2017.
FCA thematic review on financial benchmarks
The FCA has published a report setting out the findings of its thematic review of firms' oversight
and controls relating to financial benchmarks. The FCA's aim was to assess the extent to which
firms had acted in response to historic misconduct relating to benchmarks and to see whether

3. firms had implemented appropriate oversight and controls to manage the risks posed by their
involvement in benchmark activities. The FCA found that all firms reviewed had made changes to
their approach to benchmark activities, although there were a number of areas where firms needed
to take further action to manage the risks of the benchmark activities appropriately. The report
sets out six key messages for firms and provides examples of good and poor practice the FCA
saw at the sample of banks and broking firms it assessed.
REMIT and approval of first RRMs
The Agency for the Cooperation of Energy Regulators (ACER) has approved the first five third-
party registered reporting mechanisms (RRMs) under the Regulation on wholesale energy market
integrity and transparency (REMIT). RRMs can report records of transactions and orders to trade,
as well as fundamental data, on behalf of market participants directly to ACER. ACER’s press
release also includes details on how to report trades and orders, and invites stakeholders to a
public workshop on REMIT implementation on 8 September 2015, in the light of REMIT
reporting starting on 7 October 2015.
FCA finalised guidance on performance management
The FCA has published finalised guidance on risks to customers from performance management
at firms (FG15/10). FG15/10 contains guidance that suggests some ways (but not the only ways)
that firms can manage the risk of mis-selling being driven by poor performance management
practices. It also sets out some examples of good and poor practice. The FCA believes that the
culture of a firm is important in ensuring customers are at the heart of how a business is run. The
FCA is concerned that, in some cases, the progress made on financial incentives may have led to
an increase in pressure being placed on staff through other means to achieve sales. The FCA
states that it will consider any impact on the guidance arising from the UK implementation of
MiFID II, which takes effect from 3 January 2017.
Changes proposed to LPs for private equity investments
HM Treasury has published a consultation paper seeking views on a number of proposed
amendments to the Limited Partnerships Act 1907. The amendments are aimed at ensuring that
the UK LP remains the market standard structure for European private equity and venture capital
funds as well as many other types of private fund. The government had previously made a
commitment, in the 2013 Budget, to consult on technical changes to the partnerships legislation as
it applies to funds to remove unnecessary legal complexity and administrative burdens. The
proposed amendments will apply to a UK LP that is a collective investment scheme, as defined in
section 235 of FSMA 2000, but is not authorised by the FCA. Comments are invited by 5 October
2015.

4.
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
31 July 2015