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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



Claire Cummings, of Cummings Law, and Jonny Fry, of TeamBlockchain, to take part in the radio show N@ked Short Club on Resonance FM on Monday 12 November

Claire and Jonny will participate in a discussion about hedge funds and cryptocurrencies on the N@ked Short Club on Monday 12 November. The radio programme will be hosted by Dr. Stu between 9 and 10pm on Resonance FM (join on 104.4FM or online via

TeamBlockchain's November Crypto/ICO MeetUp

Peter Walker director at Link Asset Services, formerly Capita, will speak about bond, equity linked notes that have been issued using the Nivaura platform in the FCA sandbox. He will also look at the potential impact tech platforms linked to DLT may have on the capital markets and its participants. These events usually have between 50 and 100 attendees whom are professional advisors involved in the blockchain crypto space.
For more information about the event,details on the other speakers and to register use this link:


FCA consultation on illiquid assets and open-ended funds and feedback to discussion paper

The FCA are consulting on proposals to reduce the potential for harm to retail investors in funds that hold illiquid assets, particularly under stressed market conditions. Open-ended funds that invest in illiquid assets can encounter difficulties if many investors simultaneously try to withdraw their money at short notice. This happened following the result of the UK referendum on EU membership in June 2016, when a number of property funds had to suspend dealing temporarily. The FCA are considering the following:

  • funds to suspend trading when the independent valuer expresses uncertainty about the value of ’immovables’, such as commercial property, that account for a significant part of the fund’s assets

  • managers of funds investing mainly in inherently illiquid assets to produce contingency plans in case of a liquidity risk crystallising

  • depositaries to oversee the liquidity management process in these funds.

  • more information to be disclosed about the liquidity risks in these funds, the liquidity management tools available to the fund manager, the circumstances in which they may be used and what impact they may have on investors


FCA speech on Brexit preparations

On 5 November 2018, the FCA published a speech by Nausicaa Delfas, FCA Executive of International, on Brexit and maintaining market confidence. In the speech, Ms Delfas provides an overview of the FCA's current priorities relating to Brexit, including its work to ensure there is a robust regulatory framework on exit day if the UK leaves the EU without a transition period (that is, a no-deal Brexit). Among other things, Ms Delfas considers the FCA's expectations of firms preparing for a no-deal Brexit. It expects firms to:

  • Take their own legal advice on what a no-deal Brexit might mean for them and their customers, and any steps they may need to take to manage this.

  • Continue to meet the FCA's rules as they implement their Brexit plans. This means that if a firm is expanding its presence in Europe, any structures put in place by the firm must allow the FCA to supervise its UK business effectively, continue to meet threshold conditions and provide appropriate senior oversight in the UK.

  • Understand the impact of Brexit on customers, continue to service them fully and fairly, and communicate with them in a timely fashion. Firms should let customers know if there will be any change to their ability to provide services to them post Brexit, and if any changes may affect the customers' products or contracts.


ECON votes to adopt draft report on proposed Regulation on disclosures relating to sustainable investments and sustainability risks

On 5 November 2018, ECON voted to adopt a draft report on the European Commission's proposed Regulation on disclosures relating to sustainable investments and sustainability risks. ECON has published a document confirming the outcome of the vote to adopt the report and a separate document confirming that the committee has voted to enter into interinstitutional negotiations on the legislative proposal. The new regulations aim to harmonise risk disclosures and integration of sustainability risks in investment decision making for end-users.


Environment Audit Committee publishes government's response to its recommendations on green finance

On 1 November 2018, the Environmental Audit Committee (EAC) published the government response to the EAC's June 2018 report, Greening Finance: embedding sustainability in financial decision making. The EAC's report had identified inadequacies in how the UK's framework of financial regulation manages climate change risk and made a number of recommendations. The government has accepted the following EAC recommendations. It has agreed:

  • To clarify that trustees have a fiduciary duty to consider long term risk and opportunities, including environmental risks.

  • That it is good practice for pension scheme trustees to inform the design of investment strategies with an understanding of their members. It has consulted on a proposed change to require trustees to set out how they will take account of the views of members in the development of investment policies


ECON votes to adopt draft report on proposed Regulation on European crowdfunding service providers

On 5 November 2018, ECON published a press release announcing that it has voted to adopt a draft report on the European Commission's legislative proposal for a Regulation on European crowdfunding service providers (ECSP).

In the press release, ECON highlights the following changes that it proposes to make to the Commission's proposal:

  • The scope of the Regulation should be extended by increasing the maximum threshold for each crowdfunding offer to EUR8 million (rather than EUR1 million, as proposed by the Commission), calculated over a period of 12 months.

  • Requirements for crowdfunding service providers should be required to disclose the default rates of the projects offered on their platform every year.

  • Prospective investors should be provided with a key investment information sheet drawn up by the project owner for each crowdfunding offer.

  • A prospective ECSP should request authorisation from the national competent authority of the member state in which it is established, rather than from ESMA, as initially proposed by the Commission.


FCA publishes report on money laundering and terrorist financing risks in the e-money sector

The FCA recently published a report on money laundering and terrorist financing risks in the e-money sector. The report found that the majority of electronic money institutions (EMIs) had effective AML systems and controls to mitigate risk. Further, most EMIs have also updated their policies and procedures to comply with the Money Laundering Regulations. And, finally, that transaction monitoring was effective and largely based on automated technological solutions. The FCA encourages EMIs to review the report, including the examples of good and poor practice, and consider whether their AML and CTF systems and controls could be improved.


FRC project to reconsider purpose of corporate reporting launched.

The Financial Reporting Council (FRC) has launched a project to challenge existing thinking about corporate reporting, extending to a fundamental reconsideration of the annual report. Among other things, the FRC will be considering what information investors and other stakeholders require, and reviewing current financial and non-financial reporting practices. The FRC calls for ideas and suggestions as to how corporate reporting should evolve. A resulting paper is expected in the second half of 2019.

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

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

25 05 2019

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