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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:


MLD5 published in OJ

On 19 June 2018, the text of the Fifth Money Laundering Directive (MLD5) was published in the Official Journal of the EU (OJ). The Council of the EU adopted the Directive on 14 May 2018, following adoption by the European Parliament on 19 April 2018. The Directive will enter into force on 9 July 2018 (that is, 20 days after publication in the OJ). Member states must bring into force the laws, regulations and administrative provisions necessary to comply with the Directive by 10 January 2020. The key amendments that MLD5 makes to the MLD4 regime are: (i) enhanced due diligence (EDD) measures and countermeasures relating to high-risk third countries are clarified; (ii) virtual currency exchange platforms and custodian wallet providers are brought within the scope of regulation; (iii) concerns surrounding the anonymity of prepaid instruments are addressed; (iv) new obligation is imposed on member states to establish central mechanisms to identify holders and controllers of bank and payment accounts; (v) FIUs are given new powers to request money laundering and terrorist financing information from firms; (vi) access to beneficial ownership information is improved; and (vii) a number of existing provisions are clarified.


FRC Lab report on the use of blockchain in corporate reporting

On 19 June 2018, the FRC's Financial Reporting Lab published a deep-dive report, "Blockchain and the future of corporate reporting: How does it measure up?". The report considers the extent to which blockchain technology might be used to address some of the challenges faced across three areas of corporate reporting: production, distribution and consumption:

i. Production. The two areas of consolidation of group information, and data exchange within consortium or small industry association transactions, might benefit from blockchain's potential for error and tamper-free records and high level of trust in the chain.
ii. Distribution. Blockchain technology could enable greater accessibility for users to corporate regulatory filings across Europe notwithstanding legal, regulatory and technical differences.
iii. Consumption. Blockchain could remove the boundaries associated with current reporting (such as the physical boundaries of an annual report). It could also ease reporting across an industry, which currently requires the aggregation of participant data by one participant.


EU budget: European Commission adopts proposals on Single Market Programme for MFF 2021-27

For the next EU Multiannual Financial Framework (MFF) for 2021-27, the EC adopted a proposal for a Regulation establishing the programme for single market, competitiveness of enterprises, including SMEs, and European statistics. The Commission is proposing a budget of EUR4 billion for a new Single Market Programme. In addition, the Commission intends that EUR2 billion allocated under the InvestEU Fund, in particular through its SME allocation, will be able to contribute to the objectives of the programme. The objectives of the new programme are to: (i) give even higher protection to consumers; (ii) boost the competitiveness of businesses, in particular SMEs.; (iii) maintain a high level of human, animal and plant health and food safety; (iv) develop effective European standards; (v) improve the governance of the Single Market and compliance with rules and (v) produce and disseminate high-quality statistics. The proposal is open for public feedback. The deadline for comments will be eight weeks from the date that the proposal is made available in all EU languages. The Regulation will need to be formally adopted by the European Parliament and the Council under the ordinary legislative procedure before it can be published in the Official Journal and enter into force.


BoE and HM Treasury finalise fees regime for FMI supervision

On 19 June 2018, the BoE published a policy statement on the fees regime for the supervision of financial market infrastructure (FMI). Section 4 of the policy statement contains the BoE's statement of policy on its final fee-levying regime for FMI (that is, central counterparties (CCPs), central securities depositories (CSDs), recognised payment systems (RPSs) and specified service providers to RPSs). It covers: (i) the BoE's fee-levying powers; (ii) supervision fees, including the methodology and the process for levying supervision fees; and (iii) application fees, including types of application fees and the process for paying these fees. The Banking Act 2009 (Fees) Regulations 2018 have also been published on, together with an explanatory memorandum. The Regulations approve a scale of fees that may be charged by the BoE to operators of RPSs and to service providers to RPSs. The Regulations were made on 18 June 2018 and come into force on 10 July 2018.


TDExEU publishes technical note on benefits of new data protection agreement between the EU and the UK

The Department for Exiting the European Union (DExEU) has published a technical note on the benefits of a new data protection agreement between the EU and the UK. The note is part of a series of papers produced by the UK negotiating team for discussion with the EU to inform the development of the future framework.


High Court rules entire agreement clause effectively excludes misrepresentation claim

The High Court has interpreted an entire agreement statement in a share purchase agreement as a complete answer to a claim for misrepresentation, leading the court to dismiss the claim by summary judgment, without trial. Following a share sale, the buyer complained that the seller had misrepresented the target company's liabilities. The entire agreement clause consisted only of an entire agreement statement and had no wording negating reliance, or excluding liability. Nevertheless, the master found that the parties had intended to exclude misrepresentation claims. This decision is unusual because the courts have always rejected attempts to construe entire agreement statements as excluding claims for misrepresentation, and held that clear words are needed to exclude or limit liability for misrepresentation. (NF Football Investments Ltd and another v NFCC Group Holdings Ltd and another [2018] EWHC 1346 (Ch)).


Draft Companies (Miscellaneous Reporting) Regulations 2018 published

The draft Companies (Miscellaneous Reporting) Regulations 2018 have been published. The regulations introduce additional corporate governance reporting disclosures, expected to be effective for financial years beginning on or after 1 January 2019, that companies must make in relation to section 172 of the Companies Act 2006, engagement with employees, engagement with suppliers and customers, corporate governance arrangements, CEO pay ratio and outcomes from share-based incentive schemes.


FCA publishes 19th Primary Market Bulletin to consult on changes to UKLA Knowledge Base

The FCA has published its 19th Primary Market Bulletin to consult on changes to the UKLA Knowledge Base. Specifically, the FCA is consulting on a proposed update to the existing technical note on periodic financial information and inside information. The proposed amendments are extensive and centre on the issue of identifying and handling inside information during the preparation of periodic financial reports. Comments on the FCA's proposals are requested by 23 July 2018.


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25 05 2019

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