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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.  

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Claire Cummings

020 7585 1406
claire.cummings@cummingslaw.com
www.cummingslaw.com


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ICO issues first enforcement notice under GDPR

On 20 September 2018, it was reported that ICO had served an enforcement notice dated 6 July 2018 on AggregateIQ Services Ltd (AIQ) (a Canadian company located outside the EU) using its powers under section 149 of the Data Protection Act 2018 (DPA 2018). The notice is the first of its kind issued under the GDPR and the DPA 2018 and was issued as AIQ was still holding and processing the data of UK citizens after the GDPR and DPA 2018 came into force on 25 May 2018. The processing was in connection with online political messages sent by AIQ on behalf of several UK political organisations to UK citizens during the Brexit referendum.  The notice requires AIQ to "cease processing any personal data of UK or EU citizens obtained from UK political organisations or otherwise, for the purposes of data analytics, political campaigning or any other advertising purposes". The ICO held that AIQ had breached various GDPR requirements, including processing personal data without a lawful basis and processing personal data for purposes incompatible with the purpose for which it was collected.  ICO stated that the territorial scope provisions of the GDPR did apply to AIQ because its processing of personal data related to the monitoring of the behaviour of data subjects within the EU.  ICO's actions in this matter illustrate the global reach of the GDPR and serve as a reminder that the conduct of data analytics remains in the focus of the ICO. Data protection practitioners will be awaiting the results of this appeal and, potentially, any further enforcement action by the ICO.


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ICO takes action against organisations for failure to pay new data protection fee 

On 26 September 2018, ICO announced that it had commenced formal enforcement action against 34 organisations that have failed to pay the new data protection fee under the Data Protection Regulations 2018.  All organisations that process personal data must pay a fee to the ICO unless they are exempt. The money is used to fund the ICO's data protection work and its new and expanded services, such as the ICO advice line, more online resources and new guidance.  The 34 notices of intent were sent in September 2018 to a range of organisations across both the public and private sectors including the NHS, recruitment organisations, financial services and government departments. The ICO has stated that more notices are in the drafting stage and will be issued shortly.  A failure to respond to an enforcement notice or refusal to pay could result in a fine from £400 to £4,000 depending on the size and turnover of the organisation. Aggravating factors may lead to an increase in the fine up to a maximum of £4,350.


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CMA publishes speech by Andrea Coscelli on addressing the challenges that vulnerable consumers face

On 26 September 2018, the CMA published a speech by Dr Andrea Coscelli, CMA Chief Executive, on addressing the challenges that vulnerable consumers face. Dr Coscelli examined what is meant by vulnerability and discussed the work that the CMA had done and is doing to understand the extent to which certain groups of consumers face enduring problems across markets and to improve outcomes for vulnerable consumers. Dr Coscelli considered the type of issues and challenges faced by vulnerable customers. He also noted that it is crucial for regulators, businesses and others to work together to address effectively the challenges that vulnerable consumers face, and discussed some of the key issues in designing appropriate solutions.  


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FCA decision to fine broker for Principle 3 breach is first case to be completed under new process for partly contested cases

On 27 September 2018, the FCA published the decision notice it has issued to Linear Investments Ltd (LIL), an FCA-authorised firm offering a range of brokerage services, including access to trade execution via electronic direct market access (DMA).  The FCA has decided to impose a financial penalty of £409,300 on LIL.  The FCA found that LIL breached Principle 3 of the Principles for Businesses by failing to take reasonable care to organise and control its affairs responsibly and effectively with adequate risk management systems relating to the detection and reporting of potential instances of market abuse.  LIL failed to take reasonable care to ensure it could effectively conduct market abuse surveillance. This increased the risk that potentially suspicious trading would go undetected. A related FCA press release explains that this is the first case to be completed under a new process introduced for partly contested cases. It allows firms or individuals under investigation to agree to certain elements of the case and contest others, meaning they are still eligible for a discount of up to 30%.


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ESMA announces details of two new data completeness indicators for trading venues

On 27 September 2018, ESMA published a press release announcing two new data completeness indicators for trading venues detailing the delivery of double volume cap and bond liquidity data.

The two new indicators are:

  • The completeness ratio, which provides information on the completeness of a particular venue taken in isolation, irrespective of the performance of other venues; and 

  • The completeness shortfall, which gives an indication of a venue's performance in terms of completeness compared to other trading venues. 

The two indicators will assist trading venues in delivering complete and accurate data on a timely basis, by providing performance information on the timeliness and completeness of their data provision. ESMA will publish them for the first time on 8 October 2018 for DVC data, and by 1 November 2018 for bond liquidity data. They will be for all venues covered by DVC and bond data reporting.
 


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ESMA final report amending RTS on clearing obligation under EMIR

On 27 September 2018, ESMA published its final report on the extension of the deferred date of application of the clearing obligation under EMIR for certain intragroup transactions where one of the counterparties is in a third country. The report includes a new set of draft regulatory technical standards (RTS) on the clearing obligation.  The final report provides explanations on the finalised draft RTS, including the main feedback received from the consultation.
Currently there are three European Commission delegated regulations (CDRs) on the clearing obligation, which mandate a range of interest rate and credit derivative classes for clearing. The CDRs contain a deferred date of application of the clearing obligation for intragroup transactions that satisfy certain conditions, and where one of the counterparties is in a third country, in the absence of the relevant equivalence decision.


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ESMA updates MiFIR data reporting Q&As: September 2018

On 26 September 2018, ESMA published an updated version of its Q&As on data reporting under MiFIR.  The document includes new Q&As relating to FX swaps reporting and interest rate swaps reporting. It also clarifies how trading venues or systematic internalisers should populate certain fields, and makes an amendment to an existing Q&A relating to the total issued nominal amount.  The aim of the Q&As is to promote common supervisory approaches and practices in the application of MiFID II and MiFIR in relation to regulatory data reporting topics.  

 

 

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Cummings

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

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

www.cummingslaw.com

19 12 2018

 
 

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