1. 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 claire.cummings@cummingslaw.com www.cummingslaw.com
FCA reminder of new ‘Connect’ Portal for firms
The FCA has published a reminder of its new ‘Connect’ Portal for Firms, which it introduced on 1 October to allow firms to create and submit the following applications and notifications: Approved Persons, Appointed Representatives, Variation of Permissions, Cancellations and Standing data. The FCA previously advised all firms that ONA would continue to allow draft applications to be completed and submitted until 6pm on Friday 28 November, but that these applications would no longer be accessible from Monday 1 December. From next week, therefore, firms can still use ONA to view any applications that were submitted prior to 28 November and the FCA reminds firms that ONA will continue to be the appropriate system to create and submit passporting applications to the FCA.
HM Treasury drops challenge to EU cap on bonuses
The government has withdrawn its legal challenge to EU legislation that caps the level of bankers' bonuses. George Osborne confirmed that, since it looks clear that there are minimal prospects for success with the legal challenge, the government will no longer pursue it. The move came after

2. ECJ Advocate General Niilo Jääskinen gave an opinion that the EU legislation limiting the ratio was valid and rejected all the UK's legal and technical arguments against the plan. The final ruling was not expected until next year. The cap restricts bonuses to 100% of banker's pay or 200% with shareholder approval and is designed to reduce incentives for bankers to take excessive risks. HM Treasury had argued that the cap would drive talent out of Europe and push up basic pay and banks’ costs, making it harder for banks to trim costs in lean years.
Jonathan Hill speech on approach to financial services policies
The European Commission has published a speech by Jonathan Hill, Commissioner for the new Directorate General Financial Stability, Financial Services and Capital Markets Union, in which he emphasised putting consumers at the centre of financial services policies. The speech sets out the approaches that Lord Hill plans to adopt in order to ensure that financial markets bring real benefits to the general public. Points of interest in the speech concerned Lord Hill’s approach on competition, transparency and standards of behaviour and its relationship to regulation. With regard to the latter, he said that putting that right is not simply a matter of putting in place more rules, but rather a question of management taking responsibility and remembering they are there to provide a service. Lord Hill concluded his speech by stating that good regulation requires broad consultation, drawing upon deep and detailed understanding of the market, and an open debate in which ideas are properly tested.
Market Abuse Regulations 2014 published
The Financial Services and Markets Act 2000 (Market Abuse) Regulations 2014 [SI 2014/3081] have been published and will come into force on 15 December 2014. The Regulations make certain amendments and additions to FSMA, with the effect of extending the expiry date of the following until 3 July 2016: (i) the prohibition on market manipulation set out in section 118(8) of FSMA; (ii) the associated provisions in sections 118A(2) and (3) of FSMA; and (iii) the definition of "regular user" in section 130A of FSMA. The specified FSMA provisions are "sunset provisions" that would otherwise cease to apply on 31 December 2014. The new civil regime on market abuse under the Market Abuse Regulation (Regulation 596/2014) (MAR) will take effect on 3 July 2016.

3. JMLSG issues final AML and CTF guidance
The Joint Money Laundering Steering Group (JMLSG) has published final amendments to its anti-money laundering (AML) and counter-terrorist financing (CTF) guidance for the financial sector. The amendments follow the JMSLG's review of comments received on the consultation version of amendments to its guidance published in July 2014 and October 2014. The JMLSG has submitted the revised guidance to HM Treasury for approval.
New FCA webpage on IPFRU waivers
The FCA has published a new webpage setting out how a significant IFPRU firm may apply to the FCA to waive any one or more of the thresholds set out in IPFRU 1.2.3R. Under CRD IV, a firm that is deemed "significant" is required to have in place a risk committee, a remuneration committee and a nomination committee. Each committee must comply with the prescribed requirements in CRD IV. A significant IFPRU firm may apply to the FCA to waive any one or more of the thresholds set out in IFPRU 1.2.3R if it believes that one or more of the requirements relating to SYSC rules for such committees that apply to significant IFPRU firms may be disproportionate to it. The webpage also provides guidance on the information that firms should include with their waiver application.
ESMA delay on further RTS on EMIR clearing obligation
ESMA has published its letter to Jonathan Faull, European Commission Director General for Internal Market and Services, referring to recent discussions between ESMA and the Commission concerning the clearing obligation under EMIR. Steven Maijoor, ESMA Chair, states that as the Commission is currently assessing certain aspects of the first regulatory technical standards on OTC interest rate derivatives that could affect similar content of the second RTS, ESMA will delay submission of these until the assessment process is finalised.
ISDA principles for CCP recovery
ISDA has published a set of key principles for central counterparty recovery. In recognition of the increasing systemic importance of CCPs, the principles are designed to examine and respond to the issues of the adequacy and structure of CCPs' loss-absorbing resources, and crisis management planning

4. in the form of a recovery and resolution framework for CCPs when losses threaten to exceed their loss-absorbing resources. There are five principles and ISDA makes a number of recommendations as to the next steps to be taken in respect of each of the principles. ISDA considers that questions remain on both the structure and adequacy of CCP loss-absorbing resources and last week the ESMA Chair, stated that defining an appropriate recovery and resolution framework for CCPs represents its principal forthcoming regulatory challenge.
IOSCO consults on cross-border regulation
IOSCO has published a consultation report on cross-border regulation, following the establishment of a task force in June 2013 to consider cross- border regulatory issues and to assist policy makers and regulators in addressing the cross-border challenges they face. The report describes three cross-border regulatory tools that have been used, or are under consideration, by IOSCO members to help address the challenges they face in protecting investors, maintaining market quality and reducing systemic risk. The tools provide the basis for developing a cross-border regulatory toolkit and common terminology describing potential options for IOSCO members to consult when considering cross-border regulations. Comments are invited by 23 February 2015.
EU approach on proposed Regulation on SFTs agreed
The Permanent Representatives Committee of the EU Council (COREPER) has agreed, on the Council's behalf, a general approach on the proposed Regulation on reporting and transparency of securities financing transactions (SFTs). The SFT Regulation is intended to enhance financial stability by ensuring that information on SFTs is efficiently reported to trade repositories and investors in collective investment undertakings. The Council's agreement means that negotiations on the SFT Regulation can commence as soon as the negotiating team of the European Parliament are entrusted with a mandate, with the aim of adopting the SFT Regulation at first reading.
Data protection guidance in EU financial services regulation
The European Data Protection Supervisor (EDPS) has published guidance on data protection in EU financial services regulation. The purpose of the guidelines is to ensure that EU institutions and bodies are aware of data

5. protection requirements and integrate high standards of data protection in all new financial services legislation. Data protection is relevant for financial services regulation as many measures, such as those concerning surveillance, record keeping and reporting, information exchange, powers of competent authorities and sanctions for violations of applicable rules, require the processing of personal information. Some measures potentially also interfere with the right to privacy. Consequently, correct application of data protection rules and principles should contribute to the efficiency and quality of policymaking and legislation in financial services regulation. The guidelines will be kept under review.
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327 www.cummingslaw.com 28 November 2014