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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


ECON draft report on proposed Regulation on European crowdfunding service providers

ECON recently published its draft report on the European Commission's proposal for a Regulation on European crowdfunding service providers (CSPs). The report highlights the following:

  • The threshold proposed for crowdfunding offers should be raised from EUR1 million to EUR8 million.

  • The experience of NCAs on granting authorisation and supervising the crowdfunding platforms should be recognised and their role in the European framework should be enhanced.

  • As crowdfunding platforms vary in level of complexity, the proposed Regulation could differentiate between platforms facilitating the matching of investors and project owners and platforms that determine the pricing and packaging of offers by requiring different disclosure requirements for each.

  • The Regulation is an opportunity to provide regulation for initial coin offerings (ICOs).

  • Third country CSPs that wish to offer their services across the EU should be allowed to, as long as they are authorised to do so by the third country NCAs and measures are in place to guarantee that their CSPs adhere to the same rules as CSPs with a European passport.

The next step is for ECON to vote on the draft report, before it is considered by the Parliament in plenary.


ESMA responds to EIOPA questions on AIFMD interpretation

On 7 August 2018, ESMA published a letter from Steven Maijoor, ESMA Chair, to Gabriel Bernardino, EIOPA Chair, on issues relating to the interpretation of the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD). The letter responds to questions raised by EIOPA under section 11.5.2 of its second set of advice to the European Commission on specific terms in the Solvency II Delegated Regulation ((EU) 2015/35) (EIOPA-BoS-18/075). The questions (and ESMA's response) relate to the definition of alternative investment fund (AIF) and the leverage calculation in the AIFMD and its implementing measures. More specifically, ESMA sets out its response to the following questions:

  • Are AIFs that use borrowing arrangements under Article 6(4) of Commission Delegated Regulation ((EU) 231/2013) or derivative instruments under Article 8(7) of Commission Delegated Regulation ((EU) 231/2013) considered to be "leveraged" under the AIFMD?

  • Are AIFs that are managed by alternative investment fund managers (AIFMs) as defined in Article 3(2) of the AIFMD (often referred to as "registered" or "sub-threshold" AIFMs) to be considered as AIFs as defined in Article 4(1)(a) of the AIFMD?


ECB consults on draft Regulation amending Regulation on money market statistics

On 6 August 2018, the ECB published for consultation a draft Regulation concerning statistics on the money markets (MMSR Regulation), together with an explanatory memorandum in relation to a need to clarify and simplify some of the existing reporting requirements, and to improve the quality of the data. The ECB explained that the draft Regulation will guarantee that transactions with all financial counterparties are covered under the MMSR Regulation. It will also further support the reporting of the legal entity identifier (LEI) of counterparties, when one is available, to ensure that the data collection benefits from the extended mandatory use of the LEI in reporting in the EU. In addition, it will firm up the obligations of reporting agents to meet high standards designed to protect the integrity of information. The draft Regulation also specifies that the data collected may be used for the development and administration of an unsecured overnight interest rate. The draft Regulation states that it will enter into force 20 days after it is published in the Official Journal of the EU (OJ).


Draft Short Selling (Amendment) (EU Exit) Regulations 2018: Brexit SI

On 9 August 2018, HM Treasury published a webpage linking to a draft version of the Short Selling (Amendment) (EU Exit) Regulations 2018 and an explanatory information document. The draft Regulations will amend the Short Selling Regulation (Regulation 236/2012) (SSR), Commission Delegated Regulation 918/2012 supplementing the SSR, and Part 8A of the Financial Services and Markets Act 2000 (FSMA) (which implemented parts of the SSR in the UK), to address failures of retained EU law to operate effectively, and other deficiencies arising from the UK's withdrawal from the EU. Regulation 1 of the draft Regulations will come into force on the day after the day on which the draft Regulations are made. The other provisions will come into force on exit day.
HM Treasury intends to lay the draft Regulations before Parliament in autumn 2018.


Commission Delegated Regulation setting out RTS on central contact points under MLD4 published in OJ

On 10 August 2018, Commission Delegated Regulation (EU) 2018/1108 setting out regulatory technical standards (RTS) relating to central contact points (CCPs) under Article 45(11) of the Fourth Money Laundering Directive ((EU) 2015/849) (MLD4) was published in the Official Journal of the EU (OJ). The Delegated Regulation sets out criteria for determining the circumstances in which the appointment of CCPs for electronic money issuers and payment service providers is appropriate. It also sets out the functions a CCP must have to fulfil its duties. The Delegated Regulation will enter into force on 30 August 2018 (that is, 20 days after its publication in the OJ).


Services procurement guidelines for ECB's TIBER-EU framework

On 7 August 2018, the European Central Bank (ECB) published the TIBER-EU framework: services procurement guidelines. The guidelines are an integral part of the TIBER-EU Framework and detail the different elements of TIBER-EU procurement. They are divided into three parts that:

  • Set out the requirements and standards that must be met by the TI and RT providers to deliver recognised TIBER-EU tests.

  • Offer guiding principles and selection criteria for entities as they look to procure services from prospective providers.

  • Provide questions and agreement checklists that could be used when entities undertake their due diligence and look to formalise the procurement process with the TI and RT providers (set out in the annexes to the guidelines).

  • As entities go through the procurement process, they are encouraged to seek further clarification of the selection criteria, TI and RT provider requirements and any other aspects relating to the conduct of a TIBER-EU test. During the procurement process, entities are also encouraged to engage in constructive dialogue with potential TI and RT providers, allowing the entities to gain a deeper understanding of the providers' capabilities.

The guidelines are directed at national and EU authorities responsible for the adoption, implementation and management of the framework, entities looking to undertake TIBER-EU tests, organisations interested in providing cyber threat intelligence services under TIBER-EU, organisations interested in providing RT testing services under TIBER-EU, and accreditation and certification providers.


FCA consults on Global Financial Innovation Network

On 7 August 2018, the FCA published a press release announcing, in collaboration with 11 other financial regulators and related organisations, the creation of a Global Financial Innovation Network (GFIN), and the publication of a related consultation document.

The network will seek to provide a more efficient way for innovative firms to interact with regulators as they look to scale new ideas. It will also create a new framework for co-operation between financial services regulators on innovation related topics, sharing different experiences and approaches. Chapter 3 of the document sets out a mission statement that outlines the role the FCA sees the GFIN playing in supporting responsible innovation. The FCA envisages that the GFIN could serve three main functions to:

  • Act as a network of regulators to collaborate, sharing experience and best practice, and communicate to firms.

  • Provide a forum for joint policy work.

  • Provide firms with an environment in which to trial cross-border solutions (business to consumer (B2C) or business to business (B2B).

The FCA explains in the remainder of the document why it believes that the three functions constitute an important part of the GFIN, and how it will potentially operate in practice. The deadline for responses to the consultation is 14 October 2018.


ESMA updates MiFID II transitional transparency calculations for equity derivatives, equities and equity-like instruments: August 2018

On 6 August 2018, ESMA updated its FAQs (ESMA50-164-677) on transitional transparency calculations (TTC) for equity derivatives, equities and equity-like instruments required under the MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR).

An accompanying press release explains that an updated version of the TTC has been published. The update relates to the TTC for:

• Equity derivatives I.
• Equity and equity-like instruments.
• Tick size band assessment.

The links to the updated TTC can be found in the press release. Further information relating to the update is set out in section E of the FAQs.

Trading venues are expected to apply the new results from 13 August 2018.


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19 05 2019

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