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CACEIS European Regulatory Watch Newsletter

CACEIS European Regulatory Watch Newsletter

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2014 October No.4

EUROPE Official translations of the Guidelines for complaints- handling in the securities (ESMA) and banking (EBA) sectors Commission issues CRD IV Level 2 measures on passport notification Entry into force of CSDR EMIR - Official translations of the Guidelines and Recommendations regarding CPSS-IOSCO Principles for FMIs Review of the CESR guidelines on a Common Definition of European Money Market Funds Publication of the UCITS V Directive in the Official Journal of the EU Presidency compromise text on the Regulation on indices used as benchmarks in financial instruments and financial contracts LUXEMBOURG New CSSF form “Application questionnaire to set up a UCITS” BELGIUM Communication of the FSMA dated 1 September 2014 on the reporting obligations of Alternative Investments Funds’ Managers

SWITZERLAND New regulations for Swiss Financial Institutions – FinIA and FFSA THE NETHERLANDS Proposed punitive law on manipulation benchmarks FRANCE AMF updates Position n° 2013-06 on ETFs and other UCITS issues AIFM Reporting to competent authorities INTERNATIONAL IOSCO Consultation Report on risk mitigation standards for Non-centrally Cleared OTC Derivatives ODRG Report on progress in resolving OTC derivatives cross-border implementation issues Issuance of a first set of deliverables addressing Base Erosion and Profit Shifting (BEPS) by OECD

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EUROPE Official translations of the Guidelines for complaints-handling in the securities (ESMA) and banking (EBA) sectors Background On 13 June 2014, the European Securities and Mar- kets Authority (ESMA) and the European Banking Authority (EBA) published their Joint Committee Final Report on guidelines for handling consumer complaints in the securities and banking sectors. The document aims to increase market confi- dence and ensure a harmonised approach to han- dling complaints for all 28 EU Member States and across all financial services sectors. What’s in there? On 25 August 2014, the Joint Committee pub- lished official translations of these guidelines. They are now available in the following languages:

Commission issues CRD IV Level 2 measures on passport notification Background Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (here- inafter: "CRD IV") was released on 26 June 2013. In accordance with Article 35 CRD IV, a credit in- stitution wishing to establish a branch within the territory of another Member State shall notify the competent authorities of its home Member State. Before the branch of a credit institution commenc- es its activities, the competent authorities of the host Member State shall, within two months of receiving the information referred to in Article 35 CRD IV, prepare for the supervision of the credit institution and, if necessary, indicate the condi- tions under which, in the interests of the general good, those activities shall be carried out in the host Member State. Besides, in accordance with Article 39 CRD IV, any credit institution wishing to exercise the freedom to provide services by carrying out its activities within the territory of another Member State for the first time shall notify the competent authorities of the home Member State of the activities which it intends to carry out. What’s in there? On 28 August 2014, the Commission Implement- ing Regulation (EU) no. 926/2014 dated 27 August 2014 was published in the OJEU (the "Regula- tion"). The Regulation lays down standards forms, tem- plates and procedures for the CRD IV notifications relating to the exercise of the right of establish- ment and the freedom to provide services and in particular:

« A form for the submission of a branch passport notification or a change in a branch particulars notification (Annex I of the Regulation); « A form for the communication of branch pass- port notification (Annex II of the Regulation); « A form for the communication of the amount and composition of own funds and own funds requirements (Annex III of the Regulation); « A form for the submission of a change in branch particulars notification which concerns a planned termination of the operation of a branch (Annex IV of the Regulation); « A form for the submission of services passport notification (Annex V of the Regulation); and « A form for the communication of services pass- port notification (Annex VI of the Regulation). The Regulation entered into force on 17 Septem- ber 2014 and is binding in its entirety and directly applicable in all Member States. What’s next?

THE REGULATION IS AVAILABLE HERE.

Entry into force of CSDR Background

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The Commission adopted a proposal for a Reg- ulation on improving securities settlement and on Central Securities Depositories (CSDs) with- in the EU and amending Directive 98/26/EC on 7 March 2012.

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The guidelines will be applicable two months after the date of publication of the official translations.

THE OFFICIAL TRANSLATIONS OF THE JOINT COMMITTEE FINAL REPORT ARE AVAILABLE HERE.

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What’s next? In December 2014, competent authorities will no- tify existing CSDs to ESMA (Article 69).

On 18 December 2013, the European Parliament and the Council reached an agreement on regula- tory safeguards and structure for central securities depositories (CSD). The objective was to increase stability, efficiency and safety of settlement and CSDs within the EU. On 26 February 2014, the Permanent Representative Committee, on behalf of the Council of the Europe- an Union, approved the agreement reached with the European Parliament on the new rules on Central Securities Depositories. ESMA published a discussion paper on 20 March 2014 regarding the CSD Regulation in order to look for public views on technical standards on settle- ment discipline, CSD registration and requirements. On 28 August 2014, Regulation (EU) no. 909/2014 has been formally published in the OJEU. What’s in there? On 17 September 2014, Regulation (EU) no. 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) no. 236/2012 entered into force. The new Regulation aims to secure and facilitate cross-border transactions within Europe. The safety of CSDs is enhanced with the new Regulation, which introduces a common authorization, supervision and regulatory framework for CSDs (e.g. annual review of the CSDs’ processes by the competent authority). Thus, the CSDR introduces an obligation of demate- rialization and immobilization of transferable secu- rities before trading them on regulated venues. The Regulation also harmonizes the settlement period in Europe (set at a maximum of two days after the trad- ing day: T+2) and implements settlement discipline measures as well as a mandatory buy-in regime: the CSDR imposes a mandatory buy-in process of trades that fail to settle. In the long term, an increase in the competition be- tween CSDs is expected as well as a decrease in the settlement costs for investors within Europe. The Regulation also introduces several obligations impacting market operators directly. On 17 April, the European Parliament adopted the provisional text of the Regulation on CSDs. On 23 July 2014, the CSD Regulation has been adopted by the Council of the EU.

in respect of Central Counterparties (CCPs) set out ESMA’s view of how EU law should be applied in a particular area and what are the appropriate supervisory practices within the European System of Financial Supervision. The Guidelines and Recommendations Final Report dated 5 August 2014 (ESMA/2014/1009) discusses the rationale for issuing these Guidelines and Recommendations regarding the implementation of the PFMIs in respect of CCPs. It includes Guidelines and Recommen- dations regarding the implementation of the PFMIs by competent authorities as part of the exercise of their duties resulting from EMIR for the authorisation and supervision of CCPs. What’s in there? On 4 September 2014, ESMA published offi- cial translations of these Guidelines and Rec- ommendations. They are now available in the following languages:

On 1 January 2015, the T+2 settlement date obli- gation will take effect.

The requirement for mandatory dematerialization is to be applied as from 1 January 2015 for new issues and as from 1 January 2020 for all trans- ferable securities. Regulation (EU) 909/2014 will take effect on vari- ous dates in January 2015 and will be applicable to all transferable securities as from January 2025. At the end of 2015, the Implementing Technical Standards, Regulatory Technical Standards (RTS) and Delegated Acts will enter into force. The CSD Regulation will complete the regulatory framework for securities market infrastructures (along with MIFID and EMIR). The Target 2 Securities project, which will start operationally in 2015, has consistent objectives with the CSD Regulation: T2S harmonizing the op- erational aspect of securities settlement alongside with CSDR harmonizing the legal aspect. EMIR - Official translations of the Guidelines and Recommendations regarding CPSS- IOSCO Principles for FMIs Background In 2012, international regulators represented in CPSS-IOSCO (Committee on Payment and Settle- ment Systems and the Board of the International Or- ganization of Securities Commissions) issued a set of wide-ranging governance and operational Prin- ciples for Financial Market Infrastructures (PFMIs). The Guidelines and Recommendations regard- ing the implementation of the CPSS-IOSCO Principles for Financial Market Infrastructures THE REGULATION IS AVAILABLE HERE.

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These Guidelines and Recommendations will become applicable as of 4 November 2014.

Competent authorities must notify ESMA whether they comply or intend to comply with these Guidelines and Recommendations, in- cluding a justification of the reasons for any non-compliance, before these Guidelines and Recommendations become effective. ESMA’S OFFICIAL TRANSLATIONS OF THE GUIDELINES AND RECOMMENDATIONS ARE AVAILABLE HERE.

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A. NEW DEPOSITARY RULES

This emphasizes the role of the management company in the rating process. ESMA specifically mentions that it is not re -issuing the CESR guidelines as ESMA guide- lines. This means that national competent au- thorities will not have to notify ESMA whether or not they comply or intend to comply with the amended version of the CESR guidelines. ESMA will however monitor the application of this opin- ion by national competent authorities.

Depositary eligibility requirements Under UCITS V, the entities eligible to act as de- positaries for UCITS funds will be limited to na- tional central banks, credit institutions and other legal entities which (i) are authorised to carry out depositary activities, (ii) are subject to prudential supervision and (iii) meet the CRD IV capital ade- quacy requirements. Furthermore, UCITS V does not a create a “deposi- tary passport”, as UCITS will still have to appoint a single eligible depositary located in the Member State of the UCITS. Under UCITS V, the tasks and responsibilities of the depositary as regards safekeeping are aligned with the relevant AIFMD framework. For example, UCITS depositaries will have to ensure that cash flows are properly monitored and to ensure that all payments by the investor or on behalf of the investor upon the subscription of units have been received and all cash has been booked in cash ac- counts that meet certain conditions. By discharg- ing its tasks, a depositary will be required to act honestly, fairly, professionally, independently and in the interests of the UCITS and its investors. Delegation of depositary duties In line with the AIFMD, UCITS V confines the del- egation of depositary duties to the delegation of safekeeping duties only, subject to specific re- quirements. In the event of a delegation of safe- keeping, the depositary liability may not be con- tractually limited or excluded. Moreover, UCITS prospectuses must identify the delegate, contain a description of any safekeeping function delegated and refer to any conflict of interest that may arise from such delegation. Depositary liability regime The Directive makes depositary liability rules stricter by establishing an enhanced duty of care. The general rule is that the depositary is liable to the UCITS and to the unit holders of the UCITS for the loss of financial instruments held in custody by the depositary or its delegates and for all oth- er losses suffered as a result of the depositary’s negligent or intentional failure to properly fulfil its duties. In the event of a loss of financial instruments held in custody, depositaries will have to return a finan- cial instrument of identical type or the correspond- ing amount to the UCITS or to the management company acting on behalf of the UCITS. Depositar- ies are liable unless they can prove that the loss was the result of an external event beyond their Depositary duties (safekeeping, oversight, cash flow monitoring)

THE REPORT OF THE JOINT COMMITTEE PUBLISHED ON 6 FEBRUARY 2014 IS AVAILABLE HERE.

Review of the CESR guidelines on a Common Definition of European Money Market Funds Background In 2010, the definitions for Money Market Funds were adopted by CESR (ESMA is the legal “an- cestor” of CESR). The CESR guidelines distinguish Short-Term Money Market Funds (ST MMFs) and Money Market Funds (MMFs). On 6 February 2014, the Joint Committee of ESMA, EIOPA and EBA published its final report on mechanistic references to credit ratings in their guidelines and recommendations, setting out the manner in which the Guidelines were to be amended. In particular, reference is made to the assessment of the credit quality of money mar- ket instruments by managers of short-term MMFs and MMFs. What’s in there? The opinion issued by ESMA on 22 August 2014 sets out how national competent authorities should apply the modifications set out in the re- port when monitoring the application of the CESR guidelines by financial market participants. Attention is drawn to two main points: (i) the management company must perform its own doc- umented assessment of credit quality of money market instruments that allows the management company to consider a money market instrument as high quality; (ii) By exception, MMF’s may hold sovereign issuance of a lower internally-assigned credit quality based on the MMF’s manager’s own documented assessment of credit quality.

THE ESMA OPINION PUBLISHED ON 22 AUGUST 2014 IS AVAILABLE HERE.

Publication of the UCITS V Directive in the Official Journal of the EU Background The UCITS V Directive amends Directive 2009/65/ EC on undertakings for collective investment in transferable securities (the UCITS IV Directive) as regards depositary functions, remuneration poli- cies and sanctions. The Directive had been under legislative review for the past two years. The European Parliament adopted its position on 15 April 2014, while the Council approved the draft Directive on 23 July 2014. The Directive was therefore formally adopted by the European Parliament and the Council on 23 July 2014. What’s in there? On 28 August 2014, the Directive (2014/91/EU) was published in the Official Journal of the Eu- ropean Union. The Directive upgrades the depositary duties and liability regime and the managers remu- neration to the requirements of the Alternative Investment Fund Managers Directive (AIFMD). UCITS V also creates a new sanction regime in order to strengthen the fear of sanction and the reputational risk for industry players. The Commission proposal was issued on 3 July 2012.

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reasonable control, the consequences of which would have been unavoidable despite all reason- able efforts to the contrary. The liability of the depositary shall not be affect- ed by any delegation and shall not be excluded or limited by agreement. Unit holders may invoke the liability of the de- positary either directly or indirectly through the management company or the investment com- pany, depending on the contractual relationships between the depositary, the management com- pany and the investors. Under UCITS V, UCITS management companies will be required to establish and apply remuner- ation policies and practices that are consistent with and promote sound and effective risk man- agement and do not encourage risk-taking which is inconsistent with the risk profiles, rules or instruments of incorporation of the UCITS under their management and do not impair compliance with the management company’s duty to act in the best interest of the UCITS. Governance The governing body of the management com- pany shall establish, maintain and approve the remuneration policy, which shall be reviewed at least annually by the control functions. Significant management companies shall estab- lish a remuneration committee to exercise inde- pendent judgment on remuneration policies and practices, in particular as regards the remuner- ation of senior officers in control functions. The members of the remuneration committee shall not perform any executive functions in the man- agement company. B. NEW REMUNERATION RULES FOR MANAGERS

“identified staff” includes: (i) senior managers, (ii) risk takers, (iii) control functions and (iv) any em- ployee receiving total remuneration in the brack- et of senior managers and risk takers, whose ac- tivities have a material impact on the risk profile of the UCITS. Remuneration structure The remuneration structures for UCITS managers shall include: (i) rules for conducting performance assessment based on financial and non-finan- cial criteria; (ii) rules for deferral, retention and pament in instruments of variable remuneration; (iii) rules for guaranteed variable remuneration; (iv) rules for payments related to the termination of employ- ment; (v) rules on pension benefits. Third parties in scope In the event of delegations, the same remuneration rules shall apply, in a proportionate manner, to any third party making investment decisions that af- fect the risk profile of the UCITS (see recital 2 of the Directive). Proportionality UCITS managers benefit from flexibility as regards the application of the UCITS V remuneration rules. They apply in proportion to the size, internal or- ganisation and the nature, scale and complexity of the activities carried out by the manager and the fund(s). C. NEW ADMINISTRATIVE SANCTIONS UCITS V harmonises the framework of administra- tive sanctions to be imposed by the EU Member States in the event of infringement of the nation- al provisions transposing the UCITS V Directive. These sanctions will include public statements, suspension or withdrawal of the management company authorisation and maximum administra- tive pecuniary sanctions. Fines will amount to at least twice the benefit deriving from the breach

or: for legal persons up to at least EUR 5 million or 10% of their annual turnover and at least EUR 1 million for natural persons. The Member States may also apply criminal penalties. EU regulators shall publish any sanction decision (which is no longer subject to appeal) on their of- ficial websites for a period of at least five years. Furthermore, ESMA will maintain a central data- base of sanctions communicated to it by national authorities and will publish a relevant annual re- port. ESMA will moreover make reference to any imposed sanction on the list of management com- panies available on its website. Finally, UCITS V requires the Member States to es- tablish mechanisms encouraging the reporting of potential or actual breaches of the national provi- sions transposing the Directive, including secure communication channels for the reporting of such breaches (“whistle-blowing”). What’s next? The Directive entered into force on 17 Septem- ber 2014. The EU Member States will have to transpose the Directive into their national legislation until 18 March 2016. The national laws, regulations and administrative provisions transposing the Directive will become applicable on 18 March 2016 (“Go Live”). However, investment companies or management companies acting on behalf of the UCITS they manage, having appointed (before 18 March 2016) a depositary that does not comply with the UCITS V eligibility criteria, will benefit from a transitional period ending on 18 March 2018 in order to appoint a depositary which meets those requirements.

Identified staff Under the new UCITS V regime, the definition of

THE DIRECTIVE IS AVAILABLE HERE.

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LUXEMBOURG New CSSF form “Application questionnaire to set up a UCITS” Background The electronic “Application questionnaire for the setup of an undertaking for collective investment” is the current CSSF form for the submission of an application for the approval of a new UCI (including UCITS, Part II UCIs and SIFs). On 1 September 2014, the CSSF replaced the ex- isting form (for UCITS only) with the new “Applica- tion questionnaire to set up a UCITS”. What’s in there? The new application questionnaire is to be found on the website of the CSSF and will replace the current application form only as regards UCITS as from 1 September 2014. It must be noted that for all UCIs other than UCITS the current forms and procedures will remain the same. The format of the new questionnaire is an Excel spreadsheet with different tabs (1-12) for each topic to be analyzed by the CSSF during the exam- ination phase. The last tab (“Documents”) lists the documents to be submitted per tab (Appendices 1-12) together with the nomenclature to be used for each document as well as for the application email itself. The new questionnaire is exclusively available in English. The procedure for the submission of electronic ap- plication files will remain unchanged: (1) email to setup.uci@cssf.lu; and (2) e-file. Finally, the CSSF encourages the submission of complete application files with definitive informa- tion for the avoidance of delays in the approval process.

Presidency compromise text on the Regulation on indices used as benchmarks in financial instruments and financial contracts Background On 18 September 2013, the European Commis- sion published a legislative proposal which seeks to introduce a common framework to ensure the accuracy and integrity of indices used as bench- marks in financial instruments and financial con- tracts in the Union. The aim of the Regulation is to restore the confidence in benchmarks following the LIBOR and EURIBOR scandals of 2012. Bench- mark manipulation can cause significant losses to consumers and investors, distort the real economy and undermine market confidence. The proposal has four main objectives that aim to improve the framework under which benchmarks are provided, contributed to and used: 1) improve the governance and controls over the benchmark process and in particular ensure that administrators avoid conflicts of interest, or at least manage them adequately; 2) improve the quality of the input data and meth- odologies used by benchmark administrators and in particular ensure that sufficient and accurate data is used in the determination of benchmarks; 3) ensure that contributors to benchmarks are subject to adequate controls, in particular to

avoid conflicts of interest, and that their contri- butions to benchmarks are subject to adequate controls; and 4) ensure adequate protection for consumers and investors using benchmarks by enhancing transparency, ensuring adequate rights of re- dress and ensuring that suitability is assessed where necessary. What’s in there? Main provisions of the draft Regulation: 1) Benchmark providers will be regulated and su- pervised, as will contributors who are already regulated (e.g. as financial institutions); 2) Conflicts of interest will have to be managed; 3) The providers of benchmarks and contributors to benchmarks will need to ensure appropri- ate governance and controls over the bench- mark-setting process; 4) Methodologies will need to be transparent and robust and ensure the use of sufficient, accu- rate and representative underlying data; 5) Improved transparency of the benchmark-set- ting process; and 6 Suitability of assessments of benchmarks for retail contracts. On 9 September 2014, the Council of the Europe- an Union (“the Council”) published a Presidency compromise text containing amendments to the Commission's original proposal. Amongst others, the Council proposes the inclusion of the measure- ment of investment fund performance within the scope of the Regulation. The Commission proposal and the changes pro- posed in the Presidency Compromise text were discussed at a Council meeting on 17-18 Septem- ber 2014.

THE PRESIDENCY COMPROMISE TEXT IS AVAILABLE HERE.

The new questionnaire is immediately applicable (as from 1 September 2014).

However, any request currently in preparation us- ing the previous application form was accepted during a transitional period ending on 30 Septem- ber 2014. After this date, using the new applica- tion form will be mandatory.

THE NEW “APPLICATION QUESTIONNAIRE TO SET UP A UCITS” IS AVAILABLE HERE.

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SWITZERLAND New regulations for Swiss Financial Institutions FinIA and FFSA Background The process of establishment of binding stand- ards for the international financial markets is advancing quickly. Although not part of the harmonised EU market, Switzerland has decided to align its own rules and regulations with EU standards in this area. Therefore, also the key elements of a new EU initiative, the MIFID II, are to be transposed into Swiss law. Unlike the Undertakings for Collective Investment in Transferable Securities Directive, which was incorporated into the Swiss Collec- tive Investment Schemes Act, MIFID II is to be transposed into a totally new law, the Federal Financial Services Act (FFSA). Additionally, a new Financial Institutions Act (FinIA) shall govern the licensing requirements and other organisational points for financial institutions. What’s in there? Both acts, FFSA and FinIA, intend to strengthen the protection of investors on one side and to im- prove the competitiveness of the Swiss financial centre on the other side. The purpose of FinIA is to regulate the supervision of all financial ser- vices providers that conduct any kind of asset management activities. In its article 5 a hierarchy of specific licensing statuses has been introduced, whereby a licence with more extensive requirements automatically constitutes permission to perform also activities of lower level licences. However, an exemption from the licensing ob- ligation within the scope of the authorisation cascade does not lead to a dispensation from fulfilling requirements associated with the ad- ditionally performed activities; those still have to be controlled during the annual supervisory audit. Subject to the new licencing obligation for asset managers are all those who - based on a con- tract – professionally manage assets on behalf of and for the account of their clients. Therefore, managers of individual client assets as well as those who manage the assets of Swiss occu- pational benefits schemes will also require a li- cence in the future. Worth mentioning in the draft

of FinIA is moreover the introduction of “white money strategy” in article 11, which clearly obli- gates the financial institution to verify the risk of tax evasion respective tax fraud for the monies brought by the client. The other new act, the FFSA, has a few signifi- cant aspects. First of all, it is supposed to govern the relationship between financial intermedi- aries and their clients for all kinds of financial products. Among others, it provides a more pre- cise definition of the terms “financial services provider”, which shall mean all persons who “professionally render financial services to cli- ents in Switzerland” and list the activities, which fall into the term “financial service”. Further- more, it clearly states, that, when giving advice, financial service providers are obliged to take into account the necessary information on the financial situation, knowledge and experience of the client and provide him with a basic informa- tion sheet. It aims also at introduction of uniform prospectus requirements for all securities that are publicly offered or traded on a trading plat- form, although, where it makes sense, these are geared to EU regulations. Finally, it foresees improvements in terms of pri- vate actions, which can be taken in the event of misconduct by financial service providers - such as an introduction of a specific, financial services ombudsman proceeding in addition to the ordinary arbitration process as provided in civil law. What’s next? The Federal Council launched the consultation on FFSA and FINIA on 25 June 2014. This will last until 17 October 2014.

BELGIUM Communication of the FSMA dated 1 September 2014 on the reporting obligations of Alternative Investments Funds’ Managers Background This communication follows the publication of the law dated 19 April 2014 on Alternative Investment Funds and their Managers. What’s in there? This communication is deemed to inform Alterna- tive Investments Funds’ Managers on the content and the format of reports to be delivered to the FSMA (the Belgian Financial Services and Markets Authority) in accordance with the law dated April 19th, 2014 on Alternative Investment Funds and their Managers.

THE COMMUNICATION IS AVAILABLE HERE

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INTERNATIONAL IOSCO Consultation Report on risk mitigation standards for Non-centrally Cleared OTC Derivatives Background In April 2014, according to the reform program announced by the G20 Leaders in 2009, the IOS- CO Board approved the mandate of the working group on risk mitigation standards for non-cen- trally cleared OTC derivatives (the "IOSCO Working Group") to develop, with the Basel Committee on Banking Supervision and the Committee on Pay- ments and Market Infrastructure, a set of regula- tory standards on risk mitigation techniques for non-centrally cleared OTC derivatives. What’s in there? Published in September 2014, the Consultation Report CR06/2014 (the "Consultation Report") de- scribes standards that have been proposed by the IOSCO Working Group and which are directed at non-centrally cleared OTC derivatives. Such standards seek to promote legal certainty and facilitate timely dispute resolution, facilitate the management of counterparty credit and other risks and increase overall financial stability. Many of the standards are included in the recent reg- ulatory developments (e.g. EMIR, Dodd-Frank). In total, there are 9 risk mitigation standards in the Consultation Report which articulate around the below topics:

What’s in there? Information to be communicated to investors, rules to apply when these UCITS use derivative financial instruments or efficient portfolio management techniques and the criteria for financial indices in which UCITS invest are detailed in the Position. These modifications take into account the new provisions provided by ESMA on the 1 st of August 2014, especially those regarding: « Diversification and flexibility of financial guaran- tees; « Information to provide in the Prospectus; « The balance-sheet regarding over-the-counter derivatives and efficient portfolio management techniques. This update is applicable the day of its publication.

THE NETHERLANDS Proposed punitive law on manipulation benchmarks Background This communication follows the amendment of the Dutch act amending the law on financial markets 2015 (Wijzigingswet financiële markten 2015). What’s in there? This amendment will have the consequence that manipulation of benchmarks can be qualified as a criminal act. The consequence of this qualifi- cation is that these cases can be dealt with un- der criminal law and not only administrative law. What’s next? The amendment will be effective in the Nether- lands as per 1 January 2015 and therefore be effective well before the European law on the same subject becomes effective mid-2016. FRANCE AMF updates its 2013-06 Position on ETFs and other UCITS issues Background On 10 September 2014, AMF updated its 2013-06 Position on ETFs and other UCITS issues.

THE AMF POSITION IS AVAILABLE HERE

AIFM reporting to competent authorities Background AMF published on Extranet GECO:

A Q&A,

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« A guide on the practical format of reports to be delivered to the AMF. What’s in there? The Q&A includes nine questions, for instance: how to declare my AIFM reporting? The Guide aims to support Asset Management companies in order to comply with their AIFM re- porting obligations. What’s next? Some French representative associations for the post- market (AFTI) and the asset management industry (AFG) asked the AMF technical questions: AMF answered and a response from ESMA is still expected (a workgroup already exists within the ALFI in association with the CSSF).

« Scope of Coverage;

« Trading relationship Documentation;

« Trade Confirmation;

« Valuation with Counterparties;

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What’s in there? On 10 September 2014 the ODRG issued a report that provides an update to the G20 regarding further progress made in resolving OTC deriv- atives cross-border implementation issues and identifies a cross-border issue that may call for legislative change. More specifically, the ODRG provides updates re- garding two areas in which it has been working to develop approaches to address cross-border issues: (1) potential gaps and duplications in the treatment of branches and affiliates; (2) the treatment of organized trading platforms and the implementation of the G20 trading commitment. Furthermore, the ODRG reports on four areas in which it has been working to implement under- standings reached previously: (1) equivalence and substituted compliance; (2) clearing de- terminations; (3) risk mitigation techniques for non-centrally cleared derivatives transactions (margin); (4) data in trade repositories and barri- ers to reporting to trade repositories, where the need for legislative change was identified. What’s next? The next ODRG report will be submitted to the G20 Leaders Summit in November 2014 and will report - inter alia- on how the ODRG has addressed or intends to address the treatment of branches and affiliates and any further un- derstandings on the implementation of the G20 trading commitment. A timetable for the imple- mentation of these approaches will also be pro- vided. Issuance of a first set of deliverables addressing Base Erosion and Profit Shifting (BEPS) by OECD Background In 2013, OECD and G20 countries adopted a com- mon Action Plan to fight BEPS. The key objective of the Action Plan was to ensure that profits are taxed in the country where the business activi- THE FULL ODRG REPORT IS AVAILABLE HERE.

« Reconciliation;

ties generating such profits are performed and where the value is created. Moreover, the plan proposed a country-by-country reporting tem- plate to provide governments with information on the global allocation of the profits, economic activities and taxes. What’s in there? On 16 September 2014, the OECD issued the 7 first deliverables of the 15-point Action Plan dealing with the following matters: « The tax challenge of the digital economy (Ac- tion 1); « Hybrid mismatch arrangements (Action 2); « ransfer pricing and intangibles (Action 8); « Transfer pricing documentation and coun- ty-by-country reporting (Action 13); « The feasibility of developing a multilateral in- strument on BEPS (Action 15). What’s next? These reports are scheduled for official approval by the Ministers of Finance of the G20 countries at their meeting in Cairns, Australia on 20 and 21 September. The remaining eight deliverables foreseen by the Action Plan are scheduled to be issued in 2015. « Harmful tax practices (Action 5); « Tax treaty abuse (Action 6);

« Portfolio Compression; « Dispute Resolution;

« Implementation;

« Cross-border Transactions.

Each standard is accompanied by key consid- erations on how the standards should be imple- mented and explanatory notes. What’s next? A request for comments on the proposed stand- ards has been made by the IOSCO Working Group. All comments have to be sent by e-mail/ facsimile transmission or paper version before Friday 17 October 2014.

THE CONSULTATION REPORT IS AVAILABLE HERE.

ODRG Report on progress in resolving OTC derivatives cross-border implementation issues Background

THE OECD DELIVERABLES ARE AVAILABLE HERE

The Over-the-Counter (OTC) Derivatives Regula- tors Group (ODRG) is composed of representa- tives of regulatory authorities with responsibility for the regulation of OTC derivatives markets in Australia, Brazil, the European Union (European Commission and ESMA), Hong Kong, Japan, On- tario, Québec, Singapore, Switzerland and the United States. Its work focuses on cross-border issues relating to OTC derivatives reforms. On 30 August 2013, the ODRG published a Re- port on Agreed Understandings to Resolving Cross-Border Conflicts, Inconsistencies, Gaps and Duplicative Requirements (available here), which was welcomed by the G20 summit of Sep- tember 2013 in St. Petersburg. In March 2014, the ODRG delivered a report to the G20, setting out a list of identified remaining cross-border implementation issues, a summa- ry of their status and a timetable for addressing them ( AVAILABLE HERE ).

Scanning - October 2014 - page 9

Scanning This publication is produced by Legal and Compliance teams of CACEIS with the kind support of Communication teams and Group Business Development Support teams.

Editors Gaëlle Kerboeuf, Group General Counsel @ Marie-Andrée Bonnet, Compliance and Regulatory Watch Manager (France) @ Permanent Editorial Committee Gaëlle Kerboeuf, Group General Counsel Marie-Andrée Bonnet, Compliance and Regulatory Watch Manager (France) Chantal Slim, Head of Legal (CACEIS Bank France) Eliane Meziani-Landez, Head of Fund Structuring (France) Emilie Zaracki (Legal Officer) Ana Vazquez, Head of Fund Structuring and Domicile (Luxembourg) Véronique Bastin, Head of Compliance (Luxembourg) Stefan Ullrich, Head of Legal (Germany) Costanza Bucci, Legal and Compliance Manager (Italy) Mireille Mol, Legal and Compliance Manager (Netherlands) Laura Guzzi, Legal Manager (Belgium) Helen Martin, Head of Legal (Ireland) Sarah Perrier, Head of Legal and Compliance (Switzerland) Philippe Naudé, Marketing and Communication Specialist (France) Arianna Arzeni, Head of Group Business Development Support

Design Sylvie Revest, CACEIS, Communications

Photos credit Yves Maisonneuve, Yves Collinet, CACEIS, Fotolia

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