1. 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@cummingslaw.com
www.cummingslaw.com
Updated EMIR implementation Q&As
The European Securities and Markets Authority (ESMA) issued updated
Question & Answers (Q&As) yesterday on the implementation of EMIR.
Areas covered by the updated questions include: (i) the application of EMIR
to AIFs; (ii) intra-group exemptions; (iii) treatment of non-EU non-exempt
central banks; and (iv) segregation and portability and CCP organisational
requirements. The latest set of EMIR implementation Q&As can be found
at: http://www.esma.europa.eu/content/QA-VIII-EMIR-Implementation
CC&G authorised under EMIR
On 20 May the Bank of Italy authorized Cassa di Compensazione e
Garanzia S.p.A. (CC&G) to operate as a central counterparty under EMIR.
On the same date, the Bank of Italy approved the interoperability
arrangement between CC&G and the French central counterparty
LCH.Clearnet SA. Details will be available from the post-trading section of
the ESMA Public Register in due course.

2. Government correspondence on shadow banking
At a meeting on 1 April 2014, the EU Economic and Financial Affairs Sub-
Committee of the House of Lords scrutinised a number of documents,
including the European Commission's communication on shadow banking,
having previously heard from the Commission Acting Director of Financial
Markets and the Director, Competitive Markets of the Confederation of
British Industry. The Chairman of the Sub-Committee then wrote to HM
Treasury Financial Secretary outlining the evidence it had heard and setting
out a number of questions, seeking the government's position. The letter of
reply included the government's views on issues such as: (i) the definition of
"shadow banking"; (ii) the overall effectiveness of the EU approach to
shadow banking; (iii) the balance of responsibilities between the EU and the
UK; and (iv) how the UK is regulating shadow banking and feeding into the
EU discussions. This correspondence has now been published and is
available at http://www.parliament.uk/documents/lords-committees/eu-sub-
com-a/ShadowBanking/ShadowBankingCorrespondence.pdf.
ESMA publishes second risk dashboard for 2014
ESMA’s second risk dashboard of the years reviews risk issues from 1
January 2014 to 31 March 2014 and includes reports that: (i) systemic stress
indicators rose from a position of relative calm in EU financial markets,
mirroring a re-emergence of heightened uncertainty at both global and EU
levels; (ii) liquidity risk remained broadly stable, with signals continuing to
be mixed; (iii) market risk rose as the uncertainties of an uneven recovery,
and their implications for likely policy reactions, intensified at both global
and EU levels; (iv) EU contagion risk remained broadly stable, though its
nature appeared to shift; and (v) credit risk remained high, with the build-up
of risks in new areas offsetting the continued improvement in others.
CRD IV
On 20 May 2014 three European Commission delegated Regulations which
supplement the CRD IV Directive with regard to certain regulatory technical
standards have been published in the Official Journal of the European Union
(OJ). They provide supplements on the following issues: (i) Delegated
Regulation 524/2014 specifies the information that competent authorities of
home and host member states supply to one another; (ii) Delegated
Regulation 527/2014 specifies the classes of instruments that adequately
reflect the credit quality of an institution as a going concern and are
appropriate to be used for the purposes of variable remuneration; and (iii)
Delegated Regulation 530/2014 further defines material exposures and

3. thresholds for internal approaches to specific risk in the trading. The
delegated Regulations all come into force twenty days after their publication
in the OJ.
CRR
On 20 May 2014 five European Commission delegated Regulations which
supplement CRR with regard to certain regulatory technical standards were
published in the Official Journal of the European Union (OJ). They provide
supplements on the following issues: (i) Delegated Regulation 523/2014
determines what constitutes the close correspondence between the value of
an institution's covered bonds and the value of the institution's assets; (ii)
Delegated Regulation 525/2014 deals with the definition of market; (iii)
Delegated Regulation 526/2014 determines proxy spread and limited smaller
portfolios for credit valuation adjustment risk; (iv) Delegated Regulation
528/2014 supplements the CRR deals with non-delta risk of options in the
standardised market risk approach; and (v) Delegated Regulation 529/2014
assesses the materiality of extensions and changes of the internal ratings
based approach and the advanced measurement approach. The delegated
Regulations come into force twenty days after their publication in the OJ.
European Commission objections to euro interest rate derivatives cartel
investigation
The European Commission has sent a statement of objections to three banks
for their suspected participation in the euro interest rate derivatives (EIRDs)
cartel, being concerned that the three banks may have colluded to influence
the pricing of EIRDs. Four other banks have admitted involvement in the
cartel and the Commission has settled with them and impose fines.
Finance Bill 2014
The Finance Bill 2014 has been carried-over in the House of Commons from
the 2013-14 session to the 2014-15 session. This means that the Bill will
resume progress in the new session without having to start from the
beginning. The State Opening for the 2014-15 session will take place on 4
June 201 and the Committee stage resumes on 10 June 2014. The Bill is
now referred to in Parliament as the Finance (No.2) Bill 2013-14 to 2014-15

4. OECD report on regulatory best practice principles
The OECD has published a report on best practice principles for regulatory
policy on regulatory enforcement and inspections, stating that it considers
inspections to be one of the most important ways to enforce regulations and
to ensure regulatory compliance. The report, seeks to build an overarching
framework to support initiatives on improving regulatory enforcement
through inspections, making them more effective and efficient, while also
less burdensome for those who are inspected. It sets out principles to help
countries to reform inspections and develop cross-cutting policies on
regulatory enforcement. The principles set out in the report have the
informal status of guidance approved at the regulatory policy committee
level and thus have the formal status of a "soft law" and are not binding for
OECD countries. However, they will be used by the OECD Secretariat when
reviewing regulatory policy in member and non-member countries.
FATCA
The Law Society of England and Wales, the Society of Trust and Estate
Practitioners (STEP), and the Institute of Chartered Accountants in England
and Wales (ICAEW) have jointly published updated guidance on reporting
requirements under FATCA. A separate guidance note for managers of
professional firms looks at the impact which FATCA compliance will have
on internal procedures and explains how to obtain a global intermediary
identification number for FATCA.
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
23 May 2014