European Short Selling Bans Lifted
Mar 05, 2012

Summary:
Amid growing evidence that short selling bans function, at best, as very temporary circuit breakers with no long term effect on volatility, several European regulators have lifted their bans on short selling as of February 2012. The bans, imposed in August 2011, have followed the trajectory set out below (along with a summary of the disclosure regime still in force in the UK and the on-going position in Greece). In all cases, while the regulators have lifted outright bans, disclosure requirements and various restrictions on naked short selling remain in place.

The Markets in Financial Instruments Directive
Feb 06, 2012

Summary:
The Markets in Financial Instruments Directive (MiFID), in force since November 2007, has been “recast” into proposals for an updated Directive (MiFID II) and a companion regulation, the Markets in Financial Investments Regulation (MiFIR). Proposals for revisions have been in circulation since December 2010, and while the production of drafts of MiFID II and MiFIR was somewhat delayed, their contents are clearly driven by imperatives generated by current market events and conditions.

Contingent Convertible Bonds and the Impact of Basel III
Dec 20, 2011

Summary:
In January 2011, the Basel Committee on Banking Supervision (the “Basel Committee”) set out rules to supplement Basel III regulations on capital adequacy and liquidity. The Basel III reforms aim to improve the quality and level of capital within firms.

European Commission Announces Revisions to the Transparency Directive
Nov 16, 2011

Summary:
Under the headline “More responsible businesses can foster more growth in Europe”, the European Commission (the “Commission”) unveiled proposals for directives to amend several legislative measures on 25 October 2011, including a directive to amend the Transparency Directive (the “Amendment Directive”).

MF Global UK Enters Special Administration Regime
Nov 03, 2011

Summary:
The Financial Services Authority (“FSA”) has confirmed that MF Global UK Limited (“MF Global UK”) has entered the Special Administration Regime created under the Investment Bank Special Administration Regulations 2011 (“Regulations”). MF Global UK is the first investment bank to enter the Special Administration Regime. The decision to apply for special administration was initiated by the board of MF Global UK.

MiFID and MiFIR on Algorithmic Trading – and – Provision of Services AND Establishment of Branches by Third Country Firms
Oct 31, 2011

Summary:
This is the sixth in our series of briefings on MiFID and MiFIR. In this alert, we describe new obligations set out in MiFID that apply to investment firms engaging in algorithmic trading to have in place risk control measures, and authorisation requirements for third country firms providing services into or establishing a branch within the European Union as set out in MiFID and MiFIR.

MiFID and MiFIR on Supervision of Products – and – Circuit Breakers
Oct 28, 2011

Summary:
This is the fifth in our series of briefings on MiFID and MiFIR. In this alert, we describe new powers of product intervention granted to ESMA and local regulators under MiFIR and new obligations set out in MiFID for regulated markets to have in place measures to ensure systems’ resilience, including circuit breakers and controls over algorithmic trading.

European Commission Unveils Plans to Boost Energy Networks in Europe
Oct 27, 2011

Summary:
On 19 October 2011, the European Commission (the “Commission”) published a proposal to fund €50 billion worth of investment in the European Union’s (“EU”) transport, energy, and digital networks for the period from 2014 to 2020, with a view to strengthening links across Member State borders. Amongst the measures that were adopted by the Commission are a draft regulation to establish the Connecting Europe Facility (the “CEF”), the terms for the Europe 2020 Project Bond Initiative (the “Project Bond Initiative”), and a proposal for a regulation on guidelines for trans-European energy infrastructure (the “Energy Infrastructure Guidelines Regulation”).

MiFID on Client Categorisation and Transactions with ‘Eligible Counterparties’ – and – Organised Trading Facilities
Oct 27, 2011

Summary:
This is the fourth in our series of briefings on MiFID and MiFIR. In this alert, we describe the proposed changes to the current client classification regime, and in particular, amendments to the regime for transactions with ‘eligible counterparties’. We will also discuss the introduction of a new concept of regulated ‘organised trading facilities’.

Proposals for a European Union Financial Transactions Tax
Oct 26, 2011

Summary:
The proposals made by the EU Commission on 28 September 2011 regarding an EU directive on a common system of financial transaction taxation in the 27 Member States of the EU have been debated widely in the three weeks since they were presented. The presentation of the proposed Directive (the "Directive"), together with proposals to amend Directive 2008/7/EC concerning indirect taxes on the raising of capital, represent the latest stage in a series of announcements by EU authorities directed towards ensuring that the European financial sector should "contribute more fairly" towards the costs of addressing and rectifying the current European financial crisis. A series of conclusions from the European Council, communications addressed to the European Parliament and EU Commission staff working papers and consultations throughout 2010 and 2011 have created a platform upon which the relative merits of various options for taxing the financial sector have been analysed.

MiFIR on Pre and Post-Trading Transparency for Equities, Equity-Like Instruments, Structured Products, Bonds, Emission Allowances and Derivatives
Oct 26, 2011

Summary:
This is the third in our series of briefings on MiFID and MiFIR. In this alert, we describe new obligations set out in MiFIR to make certain pre and post-trade information publicly available in relation to equities, equity-like instruments, certain structured products, bonds, emission allowances and derivatives.

MiFID and MiFIR on the Obligation to Trade Derivatives on Regulated Markets and Revisions to the Best Execution Regime
Oct 25, 2011

Summary:
This is the second in our series of briefings on MiFID and MiFIR. In this alert, we describe new obligations to trade certain derivatives on regulated markets, MTFs or OTFs and the Commission’s proposals for the best execution regime.

MiFID AND MiFIR on Position Limits and Position Reporting for Commodities Derivatives and Emissions Trading
Oct 24, 2011

Summary:
The first in a series of short briefings on radical changes proposed for the regulation and conduct of investment business set out in the European Commission’s revised Markets in Financial Instruments Directive (MiFID) and Markets in Financial Instruments Regulation (MiFIR). This Client & Friends Alert outlines the “highlights” of the Commission’s proposals for the imposition of position limits and position reporting requirements for commodities derivatives and emissions trading.

Adoption of New Regulation on Wholesale Energy Market Integrity and Transparency (REMIT)
Oct 21, 2011

Summary:
On 10 October 2011, the Council of the European Union adopted a regulation on wholesale energy market integrity and transparency (the “Regulation”). The Regulation is expected to be published in the Official Journal towards the end of November 2011 and its provisions will come into force in each Member State 20 days after publication. The Regulation establishes rules prohibiting abusive practices affecting the wholesale energy markets in the European Union (the “EU”).

The Proposed Revision of the Market Abuse Directive
Oct 07, 2011

Summary:
In September 2011, an unofficial draft of the European Commission’s (the Commission) proposals for a new market abuse regime covering insider dealing and market manipulation (MAD II), was received by certain market participants. MAD II is intended to amend and update the existing Market Abuse Directive 2003/6/EC (MAD).

Regulatory Issues For European Funds: Updates on Synthetic ETFs and the Implementation of UCITS IV
Jun 20, 2011

Summary:
A recent Financial Stability Board note (“Potential financial stability issues arising from recent trends in Exchange-Traded Funds (ETFs)” ) has raised, not for the first time, the risks to investors supposedly inherent in synthetic ETFs and whether or not those risks require active management by regulatory authorities. Given the focus on counterparty risk post-Lehman, and on the need to protect retail investors investing in “complex” products, the question is being asked again as to whether or not the particular risks generated by these funds require special mitigating measures and restraints.

The MiFID Review and What it Means For Commodities
Apr 12, 2011

Summary:
The European Commission’s December 2010 consultation paper on wholesale revisions to MiFID has focused on commodities derivatives as an area for regulatory intervention and oversight. The proposals, outlined as follows, are likely to lead to significant infrastructure changes for firms that trade commodities derivatives, particularly those firms that now rely on exemptions for own account and “ancillary” trading. The proposals place unregulated and non-financial firms into a financial regulatory context by requiring trading authorisation and imposing capital requirements, conduct of business and operational requirements.

Changes to the Rules on Client Assets: Implications For Prime Brokers and Funds
Feb 25, 2011

Summary:
On 1 March 2011, a series of amendments to the FSA’s Client Assets Sourcebook (“CASS”) come into force that will require the repapering of relationships between prime brokers and their fund customers as well as a review of any liens granted in custody agreements. These amendments are set out in FSA Policy Statement 10/16 which also contains new rules to: (i) limit deposits of client monies with other group entities to a maximum of 20% (comes into force on 1 June 2011); (ii) require firms to make a Client Money and Asset Return (“CMAR”) (comes into force on 1 June 2011 ); and (iii) establish a CASS oversight controlled function (comes into force on 1 October 2011).

Proposed EU “Bail-in” Measures May Impact Credit Derivatives Framework
Feb 14, 2011

Summary:
The European Commission recently launched a consultation on the Technical Details of a Possible EU Framework for Bank Recovery and Resolution (the “Consultation”). The Consultation is designed to be read with the Commission's October 2010 communication (the “Communication”) on an EU framework for crisis management in the financial sector. The Consultation contains technical details which expand on the principles identified in the Communication.

Revising the Remuneration Code: Pan-European Requirements Applicable From 1 January 2011
Jan 05, 2011

Summary:
On 17 December 2010, the Financial Services Authority (FSA) published final rules expanding on its Remuneration Code in order to implement amendments being brought in by the Capital Requirements Directive (CRD 3) and guidelines on remuneration from the Committee of European Banking Supervisors (CEBS). These new rules expand the scope of application of the FSA’s existing Remuneration Code beyond the 26 larger banks covered by the original Code to include all banks, building societies and CAD investment firms (which will include asset managers, UCITS funds and most hedge fund managers).

The Directive on Alternative Investment Fund Managers: Implications For Non-European Investment Managers
Dec 17, 2010

Summary:
The Directive on Alternative Investment Fund Managers (the “Directive”) is aimed, broadly, at two targets. Firstly, it requires the authorisation and supervision of all alternative investment fund managers (“AIFM”) and imposes investor protection requirements on those authorised AIFM. These requirements include significant obligations to make disclosures to investors, regulators and target companies, obligations to deploy adequate risk management systems, obligations to appoint independent depositaries who bear a degree of legal liability to the investor, and leverage controls. Secondly, the Directive looks to create a truly borderless market across the EU to allow AIFM to “passport” their services throughout Europe once authorised in a single Member State. For the first time, these passports will (eventually) be available to non-EU persons.

Art. 122a: Risk Retention for Securitisations with European Credit Institution Investors
Oct 27, 2010

Summary:
Art. 122a is an article added to the European Union Capital Requirements Directive (“CRD”). The CRD sets out the framework for bank capital rules that apply to over 6,200 credit institutions established in the 30 member states of the European Economic Area (“EEA”). Although Art. 122a applies only to EEA credit institutions, it has implications for originators, issuers and arrangers of securitisations worldwide.

The EU Commission Proposes Onerous Requirements for Rated Structured Finance Instruments
Jul 22, 2010

Summary:
The EU Commission has recently proposed amendments to Regulation (EC) No 1060/2009 (the “CRA Regulation”) of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (“CRAs”), which include a proposal to require all information necessary for the CRA hired by an issuer to determine or monitor the credit rating of a structured finance instrument to be made available to non-hired CRAs. The stated purposes of the proposal are to reinforce competition between CRAs; to help avoid possible conflicts of interest under the issuer-pays model; to enhance transparency and the quality of ratings; and to promote the issuance of unsolicited ratings . The proposal follows closely the recent amendments to Rule 17g-5 of the Securities Exchange Act of 1934 in the U.S.