Trouble viewing this email? Read it online

cummings-logo-2013 (2).jpg

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



Cummings Law will be holding a roundtable teach-in and discussion exploring how to prepare for the GDPR and giving an update on the progress of MiFID II to date. The roundtable will be held on Wednesday, 21 February 2018 at our offices at 42 Brook Street. If you would like more details on this event, please e-mail Claire Cummings at or Sandra Bishop at

On Thursday 8 March 2018, Cummings Law will be hosting a roundtable to discuss digital assets, including cryptocurrencies and initial coin offerings (“ICOs”). The discussion will cover basics of ICOs and cryptocurrencies and FCA regulatory issues such as whether tokens, cryptocurrencies and ICCs are regulated by the FCA, how are tokens subscribed for in a fund offering and how they can be converted into a fiat currency as well as the potential benefits and drawbacks of using these new technologies. If you would like more details on this event, please e-mail Claire Cummings at or Sandra Bishop at


Feedback request on proposed reforms to the European financial supervision

FIA and ISDA have provided feedback on the European Commission’s (Commission) published Draft Implementing Regulation on the operations of the ESAs and the proposed supervisory framework, with their joint response focusing on ESMA. In their feedback paper, the FIA and ISDA explain that they support the overall goal of the ESAs’ review package and give a number of comments. These include: recognising the different natures of capital market supervision versus bank supervision (and ensure an appropriately differentiated policy approach at each European Supervisory Authority (“ESA”); supporting ESMA supervision for pan-European crucial IBOR benchmarks while national competent authorities retain supervisory authority at national level and the ability to whether their local benchmarks are critical; stating that ESAs should be provided with powers to temporarily suspend the application of certain regulatory requirements in certain circumstances and within a reasonable timeframe which would have the effect of relieving firms from enforcement action during that time period; and recommending that ESMA and NCAs take a different approach to supervision for wholesale and retail customers.


Anti-Money Laundering:

The Sanctions and Anti-Money Laundering Bill (the “Bill”) has had its third reading in the House of Lords, having first been introduced in October 2017, and after debate it was passed and sent to the House of Commons for consideration on 24 January 2018. The purpose of the Bill is, among other things, to enable sanctions to be imposed for the purposes of compliance with UN or other international obligations or for the prevention of terrorism and to make provision for the purposes of the detection, investigation and prevention of money laundering and terrorist financing, and to protect against threats to the international financial system. It is also intended to provide the UK with the necessary legal power to continue to implement sanctions post-Brexit, including the maintenance of existing sanctions currently imposed under EU law. In addition, clause 41 of the Bill provides that regulations may provide for, among other things, registers of persons with significant control and registers and records relating to the beneficial ownership of prescribed entities, trusts or other arrangements. In addition, a new clause has been added to the Bill which requires the Secretary of State to publish and lay before Parliament progress reports on the development of a register of beneficial owners of overseas entities that now own or buy property in the UK or participate in UK government procurement. With the UK moving away from the European Communities Act 1972 and adopting its own sanctions legislation under the Bill, the UK sanctions regime could possibly diverge from the European sanctions program and the UK’s sanctions programme may be less subject to European influence.


Countries added to the list of high-risk third countries under the Fourth Money Laundering Directive:

Under the Fourth Money Laundering Directive, the European Commission has the power to adopt delegated acts identifying high-risk third countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing regime that pose significant threats to the financial system of the EU. In December 2017, Sri Lanka, Trinidad and Tobago and Tunisia were added to the list of high-risk third countries. However, as a result of some MEPs expressing concern that the inclusion of Tunisia in the list was inappropriate, the Commission intends to reassess Tunisia “as soon as possible in 2018” and that it will “swiftly” be removed from the list if it is found to be implementing its AML/CFT commitments.


Amendments to the CSDR:

A correction slip was published making minor amendments to the CSDR. The CDSR was one of the key regulations adopted after the financial crisis of 2008. The main objective of the CSDR is to increase the safety and efficiency of securities settlement and regulate central securities depositories, by providing for, among others: (i) shorter settlement periods, (ii) settlement discipline measures, (iii) an obligation regarding dematerialisation for most securities, (iv) strict prudential and conduct of business rules for CSDs, (v) strict access rights to CSD services, and (vi) increased prudential and supervisory requirements for CSDs and other institutions providing banking services ancillary to securities settlement.


Derivatives liability add-on

ISDA had published a note citing its welcome of the Basel Committee on Banking Supervision’s review of the Net Sable Funding Ratio and its decision to give national jurisdictions the ability to lover the 20% add-on for gross dividend liabilities to 5%. They have stated their belief that the new 5% should be adopted as a permanent measure on the basis that this would promote international consistency and avoid the unintended consequences which may impact derivative businesses and also aim to avoid uncertainty, global fragmentation while at the same time contributing to robust and efficient markets in derivatives.


EU Implementation of final Basel III standards:

The EBA Chair, Andrea Enria, gave a speech on the implementation of the final Basel III stanards and how these standards should be transposed into EU law. He highlighted the following issues (i) proportionality – the EU should take into account the compliance burden of the new standards for smaller and less sophisticated local banks, (ii) modelling practices and benchmark analysis – the importance of bottom-up repair of modelling practices and the benchmarking analysis of internal models as toolkits to address and monitor undue variability and potential arbitrage in the risk weighted assets calculation, and (iii) transparency – the revised standards will require banks and supervisors to revisit the representation of risk in terms of reporting requirements and disclosures to the markets.


We have taken great care to ensure the accuracy of this version of Euro Shorts. However, Euro Shorts is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from, action taken or refrained from on the basis of this publication. If you would like to be removed from the mailing list of this publication please click unsubscribe below. Nothing within this communication may be copied, re-printed or similar without prior written consent from Cummings.

Authorised and regulated by the Solicitors Regulation Authority. Please contact us if you would like to arrange a meeting. This message (including any attachments) from the law firm of Cummings is confidential and may contain information which is proprietary, privileged or otherwise legally protected against unauthorised use or disclosure. If you are not the intended recipient, please do not read, copy, distribute, disclose or otherwise use or place any reliance on any information in this message or any attachments; and please alert the sender by return e-mail, delete this message and any attachments from your system and destroy any hard copies. Neither Cummings nor the sender accepts liability for any corruption, interception or unauthorized amendment of messages or attachments transmitted by e-mail. It is your responsibility to scan this message and any attachments for computer viruses in accordance with good working practice. The firm is not authorised by the Financial Conduct Authority, but is authorised and regulated by the Solicitors Regulation Authority (for the code of conduct please see and undertakes certain activities in relation to investments which are limited in scope and incidental to its legal services or which may reasonably be regarded as a necessary part of its legal services.


Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327

Cummings Law
42 Brook Street
London Greater London W1K 5DB
United Kingdom

22 07 2019

Subscribe a friend | Unsubscribe

email sent by multimail