Scanning Special June 2014

What’s in there? Following the political agreement reached by the European Parliament, the Council and the Europe- an Commission on 14 January 2014, the European Parliament has formally adopted the MiFID II re- gime in a plenary vote on 15 April 2014. The MiFID II regime comprises an amended Directive and a new Regulation (MiFIR). What’s next? Many texts are yet to be adopted. In line with the traditional approach for European legislation, the key next steps for the complete adoption of MiFID II regime are the following: « Q2 2014: Publication in the Official Journal of the European Union « Q2 2014: Consultation by ESMA (advice, Regula- tory Technical Standards (RTS) and Implementing Technical Standards (ITS) « Q1-Q2 2015: Delivery of ESMA advice, RTS and ITS to the European Commission « Q2 2015: Drafting of Delegated acts by the Euro- pean Commission YOU CAN FIND THE LINK TO THE EP PRESS RELEASE HERE. THE TEXT OF THE MIFIR IS AVAILABLE HERE THE TEXT OF THE REVISED MIFID IS AVAILABLE HERE. FSB OTC Derivatives Market Reforms Report Background On the 7th April 2014 the FSB publishes the Guidance on Supervisory Interaction with Finan- cial Institutions on Risk Culture and a progress report on enhanced supervision. On the 31st March 2014 the FSB plenary meets in London to discuss the vulnerabilities of the global financial system, reviewing the policy work to complete core financial reforms (e.g. ending too-big-to-fail and addressing shadow banking risks). What’s in there? This report presents the state of regulatory pro- gress for the FSB member’s jurisdiction. The report presents its findings of the progress for: « Trade reporting: the majority of FSB jurisdic- tions have trade reporting, it is expected by the « Q2 2016: Transposition in national laws « Q4 2016: Application of new rules for firms in scope

end of 2014 only three of these jurisdictions will not have this type of reporting. « Central Clearing: as of April 2014 three juris- dictions reported having some Central Clearing requirements, it is also presented the state of operation of the CCP (e.g. jurisdictions where they can operate). « Capital requirements: state of the Basel III re- quirements for centrally cleared and non-cen- trally cleared derivatives. « Margin requirements: some regions started to develop regulatory reforms needed to im- plement the recently finalised BCBS-IOSCO margin standards for non-centrally cleared derivatives. « Exchange and electronic platform trading: presents the state of the legislative frame- works and says it lacks consistency over juris- dictions (e.g. timing of implementation, scope of applicable rules etc.). This report also targets the implementation is- sues (e.g. cross-border regulatory issues) and the market developments when implementing these reforms. Last topic presented is the pro- gress work stream support. What’s next? It is expected that in November 2014 G20 Lead- ers summit, the Key international policy stand- ards will be finalised. It is also expected that trade repository reporting will continue expand- ing until the end of 2014. PRIIPS regulation voted by the European Parliament Background A draft Regulation for PRIPs was published on 3 July 2012, following publication of research into PRIPs and a consultation from the Commission on the leg- islative steps for the PRIPs initiative. A compromise was reached by the COREPER and the European Parliament, on 4 April 2014. What’s in there? With the vote on plenary session of the PRIIPS regulation on 15 April 2014 a further step is made towards the ongoing goal of boosting consumer trusts in financial markets. The basic message here is that PRIIPS manufacturers will need to provide a standard key information document (the KID) while advising or selling their vehicles to retail investors. THE PUBLICATION IS AVAILABLE HERE.

necessary to what the main uses of FX spot con- tracts are. The Commission stresses that there are divergent approaches across Member States and interna- tionally concerning the delineation between FX forwards and FX spot contracts. It aims to tackle the divergence by issuing the implementing regu- lation taking into account the input from the con- sultation. What’s next? The European Commission will accept contribu- tions to the consultation until 9 May 2014. The consultation will be considered by the Commis- sion in drafting the implementing regulation that will define FX spot contracts. MiFID II and MiFIR adopted by the European Parliament Background The original Markets in Financial Instruments Di- rective (MiFID) came into effect on 1 November 2007. Nearly six and a half years after its entry into force, work on the revision of the MiFID regime is en- tering the final straight. MiFID II aims to address a number of issues underlying the operations of firms and financial markets, as identified by the Financial Stability Board and by the European Commission during the financial crisis. The imple- mentation of MiFID II will prove to be challenging for the financial industry. The 720-page directive will have a substantial impact on the distribution activities and the value chain of asset managers, investment firms, banks, distributors and market operators. MiFID II developments should be fol- lowed actively by all financial firms in order to keep abreast of events. THE CONSULTATION PAPER IS AVAILABLE HERE.

Scanning - May 2014 - page 5