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


G20 commitment to implement FATF standards and support for work on crypto assets

G20 Finance Ministers and Central Bank Governors (at their meeting in Buenos Aires on 21-22 July) recognised the real and growing money laundering and terrorist financing risks from crypto-assets and the urgency of action to address these risks; they reiterated their determination to fight money laundering and terrorist financing, and they called on the FATF to take further action to counter proliferation financing. The communique highlights G20 countries' individual and collective commitment to the full and effective implementation of the FATF Standards. Under the US Presidency of the FATF, the FATF will prioritise work on combating the financing of the proliferation of weapons of mass destruction, further strengthening efforts to combat the financing of terrorism and taking action to promote a more consistent and effective regulation of virtual currencies and other crypto assets. The FATF recognises the urgent need to clarify how the FATF standards apply to virtual currency providers and related businesses, including for customer due diligence, fund transfers, supervision, and enforcement. The FATF will update the G20 on this in October 2018.


ESMA consults on extending the derogation for EU to third-country EMIR intragroup clearing exemptions

On 11 July 2018, ESMA published a consultation paper on the clearing obligation under EMIR. In the Paper, ESMA proposes a draft amending the Regulatory Technical Standard relating to the treatment of intragroup transactions between EU and third country group entities. As no third-country equivalence determination has been made in relation to the EMIR intragroup clearing exemption regime, ESMA proposes to extend to December 2020 the current derogation provided for these transactions in the absence of the relevant equivalence decisions. The consultation is open until 30 August 2018.


ESMA updates EMIR Q&As on reporting

On 12 July 2018, ESMA published an update to its Q&A in relation to the reporting requirements under EMIR.

This update provides further clarity on the following areas:

  • amendments to the existing General Q&A 1 on identification of counterparties to a derivative that confirm a portfolio manager could be a counterparty to a derivative when entering into a derivative on its own account and own behalf; and

  • amendments to the existing TR Q&A 40 on Legal Entity Identifier (LEI) amendments to simplify the existing process and clarify other processes TRs should follow in different scenarios where reports must be updated in relation to the LEI.


FCA approach to temporary permissions regime

On 24 July 2018, the FCA published a webpage on its approach to the temporary permissions regime (TPR) for inbound passporting EEA firms and funds. The purpose of the TPR is to enable EEA firms currently using a passport to operate in the UK to continue their activities in the UK for a limited period after exit day if there is no implementation period. The FCA sets out its proposed approach to: (i) the application of the TPR; (ii) the process for EEA firms and funds to notify the FCA that they wish to use the TPR; and (iii) the FCA rules that will apply to firms in the TPR. The FCA intends to consult in autumn 2018 on the rules that will apply to firms and funds in the TPR, including fees and levies. It will publish a policy statement and final rules early in 2019.


BoE and PRA approach to temporary permissions regime and temporary recognition regime

On 24 July 2018, the BoE published a webpage on its and the PRA's approach to the temporary permissions regime (TPR) and the temporary recognition regime (TRR). The purpose of the TPR is to enable EEA firms currently using a passport to operate in the UK to continue their activities in the UK for a limited period after exit day if there is no implementation period. The TRR provides a similar framework for non-UK central counterparties (CCPs) that are currently permitted to offer clearing services in the EU. The webpage provides details of the approach of the BoE and the PRA to notifications by firms intending to use the TPR or the TRR and the rules that will apply to firms in the TPR. The BoE and the PRA expect to provide further guidance to firms on the TPR and the TRR in due course, including the notification process for entry. The PRA intends to consult in autumn 2018, in co-ordination with the FCA as appropriate, on proposed changes to its broader rules relating to the TPR.


FCA papers on cost benefit analyses and field trials

On 24 July 2018, the FCA published two papers on its approach to measuring the impact of its policies before it intervenes with rule-making powers:

  • How we analyse the costs and benefits of our policies. This paper sets out the FCA's approach to cost benefit analysis (CBA).

  • When and how we use field trials. The paper sets out principles for when the FCA is more likely to use field trials, including feasibility, impact and proportionality. It also sets out the typical stages of FCA field trials.

  • The FCA has also published an occasional paper on estimating the benefits of interventions that affect consumer behaviour. This paper discusses how to estimate and assign monetary values to the benefits resulting from regulatory interventions aimed at addressing behavioural distortions and informational asymmetries.

  • On a webpage relating to these papers, the FCA states that it welcomes views from stakeholders at any point about its approach and techniques for measuring the likely impacts of policies.


Financial Conduct Authority responds to Environment Audit Committee recommendations on green finance

On 6 July 2018, the FCA published its response to the recommendations the Environment Audit Committee made to it in its June 2018 report, Greening Finance: embedding sustainability in financial decision making. The FCA's comments include that it will: (i) consult on rule changes requiring independent governance committees (IGCs) to report on their firm's policies on evaluating environmental, social and governance (ESG) considerations and take account of members' ethical concerns; (ii) highlight to issuers the need to make adequate disclosure on materially important information, including on ESG, however, it will not amend the listing rules to require climate-related financial disclosures; and (iii) publish its approach on climate-related issues and green finance later in 2018.


House of Commons European Scrutiny Committee considers progress of European Commission legislative proposals on sustainable finance

On 24 July 2018, the House of Commons European Scrutiny Committee published its thirty-sixth report of the 2017-19 parliamentary session. In the report, the committee considers the European Commission's legislative proposals for three regulations relating to sustainable finance. The committee questions the practical effect of the sustainable taxonomy proposed by the Commission, given that the sustainability criteria that it establishes would not be binding. It comments that it is "somewhat incoherent" to propose a taxonomy but not then to apply its substance to the proposed Regulation amending the Benchmarks Regulation on low carbon benchmarks and positive carbon impact benchmarks.

The committee requests HM Treasury to clarify several points relating to the proposals, including: whether the new environmental, social and governance (ESG) disclosure requirements for institutional investors and investment advisors would affect the regulatory baseline against which any requests for equivalence decisions would be judged under the AIFMD and MiFIR.


ESMA follow-up report to MiFID suitability requirements peer review

On 24 July 2018, ESMA published a follow-up report to its peer review on suitability requirements under the MiFID.

The report provides an update on the actions undertaken by national competent authorities (NCAs) since ESMA published its previous peer review report in April 2016. Points of interest in the follow-up report include the following:

  • ESMA identifies that NCAs, to various degrees, have made improvements in how they supervise the suitability requirements.

  • It appears that NCAs are more attentive and proactive in their supervision of the suitability requirements.

  • Regarding the levels of enforcement action during the review period, the findings from the follow-up were mixed.

  • ESMA is satisfied that the FCA has addressed the deficiencies raised against the UK. These related to the sufficient provision of information on whether firms operating on a branch basis (where the NCA is the host supervisor) and on freedom to provide services (where the NCA is the home authority) were providing investment advice.

  • MiFID remains one of the priority areas for ESMA's supervisory convergence work programme. ESMA reiterates the importance of continued and meaningful supervisory efforts to reach a high level of compliance with MiFID suitability requirements.


BEIS consultation on national security and investment review

On 24 July 2018, BEIS published a White Paper setting out how the government will upgrade its powers to scrutinise investments and address the risks that can arise from hostile parties acquiring ownership of, or control over, businesses or other entities and assets that have national security implications. Under the White Paper proposals, the government will encourage businesses and investors to notify it ahead of transactions that might give rise to national security risks. The White Paper proposes how the government would be able to call in transactions that may give rise to national security risks to assess them more fully. This call-in power would be economy-wide, reflecting the need for flexibility to address national security risks wherever they arise. Measures will also ensure that hostile parties or groups cannot circumvent our rules by acquiring an asset that has national security implications, such as intellectual property, rather than acquiring the business itself.

The remedies proposed by the government include confirmation to proceed, approval subject to conditions and blocking or unwinding a deal, where this has already taken place (in exceptional circumstances only). The government believes that the proposed package of reforms strikes the right balance between maintaining the openness and attractiveness of the UK as a destination for inward investment, while also providing the government with modernised powers it needs to protect the country.


You regularly receive communications from Cummings Law Ltd ("Cummings") relating to legal updates, invitations to events and other information that may be of interest to you. We believe that we have a legitimate interest in sending these to you and in order to do so we hold your personal data on our database. It is our responsibility to provide you with our privacy policy, which governs the communications that we send to you. In our privacy policy, you will find details about how we use your personal data and how you can exercise your rights in relation to it. If you would prefer not to receive our emails please unsubscribe here or below or at any time by clicking the unsubscribe link which is located at the bottom of every email we send to you.

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 Fisher
Devonshire House 1 Mayfair Place
London Greater London W1J 8AJ
United Kingdom

25 05 2019

Subscribe a friend | Unsubscribe

email sent by multimail