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Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services industry.

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


Updated privacy policy for Cummings Law

Cummings Law has updated its privacy policy in relation to the GDPR, which comes into force on the 25th May 2018. Our privacy policy can be found on our website at the following link:


FCA consults on new financial services directory and improvement of financial services register

The FCA recently published a consultation paper on a new directory of financial services workers. The FCA explains that the existing financial services register provides a public record of regulated firms and individuals that have been approved. It currently includes information on a firm's senior management, its control staff and customer-facing roles. Publication of this information meets the FCA's obligations under the Financial Services and Markets Act 2000 (FSMA). The financial services register will continue following the extension of the senior managers and certification regime but will contain fewer individuals. This is because only specified senior manager roles at firms will be approved, and so will appear on the financial services register. Comments can be made on CP18/19 until 5 October 2018. Subject to the outcome of the consultation, the FCA aims to publish final rules in winter 2018.


IOSCO consults on guidance for commodity storage and delivery infrastructures

IOSCO has published a consultation report setting out proposed guidance for commodity storage and delivery infrastructures. The proposed guidance is aimed at relevant storage infrastructures (such as warehouses, sheds, tanks or vaults) and their relevant oversight bodies (which includes market authorities, such as trading venues, central counterparties, and regulators that oversee relevant storage infrastructures. It takes the form of good or sound practices to assist those entities to identify and address issues that could affect commodity derivatives' pricing and, in turn, affect market integrity and efficiency. The report focuses on five areas where differences in practices related to the storage of physical commodities and storage infrastructure operations were found, which have the potential to affect derivatives pricing if not addressed by appropriate policies and procedures. These areas are: (i) oversight; (ii) transparency; (iii) conflicts of interest; (iv) fees and incentives and (v) operations. The overarching aim of the potential good or sound practices set out in each area is to create a framework that incentivises the market towards best practice and self-correction, rather than one that takes a prescriptive approach in prohibiting certain behaviours or requiring new actions. IOSCO invites comments on the proposed guidance by 29 August 2018.


House of Commons Treasury Committee asks HM Treasury, FCA and BoE for Brexit analysis

On 3 July 2018, the House of Commons Treasury Committee published letters sent by Nicky Morgan, Committee Chair, to Philip Hammond, Chancellor of the Exchequer, Andrew Bailey, FCA Chief Executive, and Mark Carney, Bank of England (BoE) Governor relating to Brexit. Ms Morgan explains that, in the months ahead, Parliament will be called on to make key decisions regarding the terms of the UK's exit from the EU and the framework for its future relationship. She considers that Parliament should be making these key decisions on the basis of high-quality analysis and information about the impacts both on the economy, and on the institutions charged with delivering the objectives for economic policy set by Parliament and the government. In the letters, Ms Morgan asks for analysis on the withdrawal agreement and the future relationship framework. She also explains that she will write again, as the timetable becomes clearer, to set out more fully the committee's expectations, including in the event that no agreement is reached on the terms of withdrawal or the framework for the future relationship.


EBA FinTech reports on prudential risks and opportunities and impact on incumbents' business models

On 3 July 2018, the EBA published reports on the prudential risks and opportunities for institutions arising from FinTech and the impact of FinTech on incumbent credit institutions' business models. The reports are the first output of the EBA's FinTech roadmap. The report on the impact of FinTech on incumbent credit institutions' business models considers the drivers that are shaping and inducing change in the business models of traditional financial services institutions (that is, incumbents) in response to the potential disruption in the provision of financial services from emerging technologies and the entrance of new players to the market. The report on the prudential risks and opportunities arising for institutions from FinTech is intended to inform and share information without making recommendations to competent authorities or institutions. It focuses on micro-prudential aspects, providing guidance on such applications, and outlines seven use cases that were selected for analysis that consider the application of FinTech to existing financial processes, procedures and services. The EBA has also published new webpages on financial innovation and FinTech, which provide information on the EBA's FinTech knowledge hub and a glossary of terms for financial innovation.


FCA announces successful applicants to fourth cohort of regulatory sandbox

On 3 July 2018, the FCA published a press release providing details of the 29 firms that were successful in their applications to begin testing in the fourth cohort of the regulatory sandbox. The FCA states that this is the largest sandbox cohort to date, with the highest number of applicants meeting the FCA's eligibility criteria. Areas covered in the latest cohort include consumer credit, automated advice and travel insurance. Other points to note about cohort 4 include:

  1. There has been an increase in the number of firms testing wholesale propositions including firms that are aiming to increase the efficiency of the capital-raising process;

  2. Over 40% of the propositions are using distributed ledger technology: six to automate the issuance of debt or equity and two to support the provision of insurance. Other technology applied includes geo-location technology, use of application programming interfaces and artificial intelligence; and

  3. A small number of propositions relate to crypto-assets, which the FCA explains will help inform its policy work and propositions aimed at helping lower income consumers. The FCA states that it is keen to explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks.

The FCA states that the application window for cohort 5 of the sandbox will open later in 2018.


FCA policy statement on final 2018/19 regulatory fees and levies

On 3 July 2018, the FCA published a policy statement on regulated fees and levies for 2018/19. The policy statement sets out the final 2018/19 fees and levies for the FCA, the Financial Ombudsman Service, the Money Advice Service, the Pension Wise service, the Single Financial Guidance Body and HM Treasury's illegal money lending levy expenses. The total 2018/19 annual funding requirement (AFR) remains unchanged from CP18/10 at £543.9 million (representing an increase of 3.2%). The AFR includes the FCA's ongoing regulatory activities budget costs, the costs it needs to recover for changes to its regulated activities, and the costs of EU withdrawal. Alongside the policy statement, the FCA has published the instruments making the rules for the 2018/19 fees and levies. These instruments were made by the FCA Board on 28 June 2018 and came into force on 2 July 2018. The FCA advises that firms can use its online fees calculator to work out their individual fees based on the final rates. It will invoice fee-payers from July 2018 onwards for their 2018/19 periodic fees and levies.


New Prospectus Regulation: Financial Services and Markets Act 2000 (Prospectus and Markets in Financial Instruments) Regulations 2018

On 29 June 2018, the Financial Services and Markets Act 2000 (Prospectus and Markets in Financial Instruments) Regulations 2018 were published. The Regulations amend FSMA 2000 for the purposes of implementing the new Prospectus Regulation. In summary, the Regulations amend:

  1. Section 86(1)(e) of FSMA 2000 (Exempt offers to the public), by replacing "100,000" with "8,000,000" such that the threshold for offers to the public that are exempt from the obligation to publish a prospectus is increased from EUR100,000 to EUR8 million.

  2. Paragraph 9(1) of Schedule 11A to FSMA 2000 (Transferable securities), by replacing "5,000,000" with "1,000,000" such that the threshold for securities exempt from the prospectus regime has been reduced from EUR5 million to EUR1 million.

The Regulations also make other minor amendments to FSMA 2000, and to other primary and secondary legislation, in relation to the UK transposition of MiFID II. The Regulations were made on 27 June 2018 and come into force on 21 July 2018.


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Cummings Fisher
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United Kingdom

25 05 2019

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