Trouble viewing this email? Read it online

cummings-logo-2013 (2).jpg

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


FCA speech on action to tackle money laundering in capital markets

The FCA recently published a speech given by Mark Steward, FCA Director of Enforcement and Market Oversight, on MiFID II and the fight against financial crime. Among other things, Mr Steward comments on how the FCA is acting on the UK's October 2017 national risk assessment, which identified an emerging risk of money laundering in capital markets. The FCA has several investigations underway on a series of capital market transactions that appear to have no market purpose or function. If the FCA's suspicions are correct, these transactions falsify liquidity, trading volume, and supply and demand in the market, and their purpose is unrelated to the sale and purchase of the underlying investments. The FCA has started a small number of investigations into firms' systems and controls. It has indicated to these firms that it is looking at whether there has been any misconduct that may justify a criminal prosecution under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations.


FCA and PSR Chair speech on Big Data

The FCA recently published a speech by Charles Randell, FCA and Payment Systems Regulator (PSR) Chair, on Big Data. Points of interest include:

  1. The FCA and PSR are required to have regard for the general principle that consumers should take responsibility for their decisions. However, this assumption is increasingly being called into question, particularly where vulnerable consumers are involved.

  2. The power of Big Data corporations and their central role in service provision raises significant questions about the adequacy of global frameworks for competition and regulation. •

  3. Regulation is central because it will help define whether artificial intelligence and Big Data liberate customers or disenfranchise them. and worsens access to financial services through identifying the most profitable or the most risky customers.

  4. The foundations of good innovation must have three elements: purpose, people and trust.

  5. In relation to trust, good communication is essential. Short and readable statements making clear what firms will and will not do with their customers' data need to be developed with consumers, not imposed on them.

  6. The FCA and the PSR are fully supportive of the government's proposals to establish a Centre for Data Ethics and Innovation, ensuring the UK sets the highest standards for ethical conduct in harnessing the power of Big Data.


Study on competition issues in the area of financial technology

ECON has published a study on competition issues in the area of FinTech. The study notes that an established case practice of how to deal with competition concerns in this area has not yet been developed and official decisions by competition authorities have still to emerge. Most potential competition issues in the FinTech sector have not occurred, or have not been detected by competition authorities, so far. It considers that the application of competition instruments to analyse potential anti-competitive behaviours in the FinTech sector faces several challenges, the most relevant being the difficulty in applying traditional instruments to the new market phenomena, and concludes that the current state of the markets for FinTech services is generally too fluid to reach firm conclusions on the existence of competition challenges that need the deployment of competition tools on a large-scale basis.


FICC Markets Standards Board consults on algorithmic trading standard

On 11 July 2018, the FICC Markets Standards Board (FMSB) published for consultation a transparency draft of a statement of good practice (SGP) on algorithmic trading in the wholesale fixed income, commodity and currency (FICC) markets. The FMSB notes that use of computer algorithms that automatically determine individual parameters of orders to facilitate trading in FICC markets has significantly increased in recent years. However, this activity has the potential to adversely impact market and firm stability and to harm clients. The draft SGP therefore sets out a number of good practice statements relating to the use of algorithms by FMSB member firms. The SGP consists of nine good practice statements and commentary relating to algorithmic trading. Areas covered include the following:

  1. Appropriate governance framework to provide for clear responsibility for, and oversight of, the business' algorithmic trading.

  2. Minimum standards relating to a range of issues such as risk and execution controls, kill switches, testing practices and business continuity.

  3. Pre- and post-trade risk and execution controls.

  4. Appropriate software development and change management processes.

  5. Appropriate policies and procedures to ensure compliance with the requirements of the SGP.


Draft Finance Bill 2019 legislation published

HMRC has published draft legislation for the Finance Bill 2019. Among other things, the draft legislation extends corporation tax to the property income of non-resident companies, and extends capital gains tax and corporation tax on property gains to non-residents. The government has also amended various corporate tax provisions, including those relating to exit charges, controlled foreign companies and hybrids and other mismatches to be compliant with the EU's Anti-Tax Avoidance Directive. The consultation on the draft provisions generally closes on 31 August 2018 and the government will introduce the Finance Bill 2019 into Parliament following the Budget in the autumn.


FCA revised version of payment services and e-money approach document

On 6 July 2018, the FCA published version 2 of its approach document on payment services and electronic money) to reflect the requirements on operational and security risk under the revised Payment Services Directive. In summary, the FCA is requiring all payment services providers to comply with the EBA's guidelines on operational and security risk under PSD2, and to report to the FCA at least annually on their operational and security risk management frameworks.


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 Legal Shorts. However, Legal 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