European Union: Governance & Securities Law Focus: Europe Edition, October 2013

In this newsletter, we provide a snapshot of the principal European, US and selected global governance and securities law developments of interest to European corporates and financial institutions.

The previous quarter's Governance & Securities Law Focus newsletter is available here.

EU DEVELOPMENTS

Opinion on ESMA's Powers under the Short Selling Regulation

On 12 September 2013 Advocate-general Jääskinen delivered his opinion in the case of the UK v. the Council of the European Union and European Parliament in which the UK contests the validity of Article 28 of the Short Selling Regulation. Article 28 gives the European Securities and Markets Authority ("ESMA") the power to require disclosure of short positions or to ban short selling of certain financial instruments in emergency situations. The Advocate-general considers that Article 28 should be annulled because Article 114 of the European Treaty is not the correct legal basis for conferring such powers on ESMA. The opinion of an advocate-general is not legally binding on the court. The judges will now consider all of the evidence as well as the opinion before giving judgment.

The opinion is available at:

http://curia.europa.eu/juris/document/document.jsf?text=&docid=140965&pageIndex=0&doclang=EN&mode=req&dir=&occ=first∂=1&cid=6255244

Reporting under EMIR Delayed

ESMA announced, on 13 September 2013, that registration of the first trade repository under the European Market Infrastructure Regulation ("EMIR") is not expected before 7 November 2013. Reporting under EMIR can only begin once a trade repository has been registered. Reporting is therefore not expected to begin until February 2014. In addition, the first central counterparty ("CCP") authorisation is not likely to occur before 15 October 2013. CCPs already clearing in Europe had until 15 September 2013 to submit their applications to ESMA for authorisation or recognition.

Separately, ESMA has requested the European Commission to allow a later start date for reporting of exchange traded derivatives ("ETDs") to trade repositories under EMIR. ESMA considers that without further guidance being issued on the reporting of ETDs, there is a risk that ETD reporting would not be consistent. To allow time for such guidance to be prepared and implemented, ESMA proposes to amend the existing technical standards by inserting a reporting start date of 1 January 2015.

ESMA's letter to the European Commission is available at:

http://www.esma.europa.eu/system/files/2013-1086_-_reporting_to_trade_repositories_-the_case_of_etds.pdf

ESMA Publishes Third Country Advice on Equivalence

ESMA published, on 3 September and 2 October 2013, technical advice to the European Commission on the equivalence of the derivative rules in the US, Canada, Japan, Australia, Hong Kong, Singapore, Switzerland, South Korea and India to the rules under EMIR. The scope of the advice covers requirements for CCPs and trade repositories, requirements for the clearing obligation, reporting obligation, non-financial counterparties, and risk mitigation techniques for uncleared trades. The European Commission is responsible for adopting implementing acts on equivalence for each jurisdiction.

The technical advice is available at:

http://www.esma.europa.eu/page/Post-trading-documents

ESMA Consults on the Clearing Obligation

On 12 July 2013, ESMA published a discussion paper on the clearing obligation under EMIR. The paper is a preliminary consultation paper to obtain views on the preparation by ESMA of draft regulatory technical standards ("RTS") on the clearing obligation and, in particular, to assist ESMA to develop its approach to determining which classes of OTC derivatives need to be centrally cleared and the phase-in periods for the counterparties concerned. The paper sets out ESMA's proposed approach to determining: (i) the characteristics of OTC derivatives that should be centrally cleared; (ii) the dates from which the clearing obligation would take effect; and (iii) the minimum remaining maturity of OTC derivative contracts referred to under EMIR. ESMA will consult on specific draft RTS once CCPs are authorised or recognised to clear each class of derivatives (the earliest date for such authorisation / recognition is 15 September 2013). A template for responses to the consultation is available, which respondents should use, if possible, although ESMA will accept responses in other formats.

The consultation closed on 12 September 2013. The discussion paper is available at:

http://www.esma.europa.eu/content/Template-Responses-Discussion-Paper-Clearing-Obligation-under-EMIR

European Commission Adopts Two Delegated Regulations under EMIR

On 12 July 2013, the European Commission adopted (i) a delegated regulation specifying the fees to be charged to trade repositories by ESMA; and (ii) a delegated regulation to include the central banks and debt management offices of Japan and the United States in the list of exempted entities under Article 1(4) of EMIR. Both regulations will enter into force 20 days after their publication in the European Official Journal. In relation to the second regulation, the European Commission states that it will continue to monitor the finalisation of OTC derivatives rules in other G20 jurisdictions and will exempt, if necessary, the central banks and debt management offices of other countries with the adoption of further similar delegated acts.

The delegated regulation specifying the fees to be charged is available at:

http://ec.europa.eu/internal_market/financial-markets/docs/derivatives/130712_delegated-regulation-fees-esma_en.pdf

The delegated regulation to include the central banks and debt management offices of Japan and the United States is available at:

http://ec.europa.eu/internal_market/financial-markets/docs/derivatives/130712_delegated-regulation-emir-central-banks_en.pdf

ESMA Consults on Draft RTS for Derivatives with Extraterritorial Effect under EMIR

On 17 July 2013, ESMA opened its consultation for draft RTS under EMIR on contracts having a direct, substantial and foreseeable effect within the European Union and non-evasion of the provisions of EMIR. The consultation clarifies the position on the application of EMIR central clearing or risk mitigation obligations to OTC derivatives contracts between non-EU counterparties which have a direct, substantial and foreseeable effect within the EU.

The obligations would apply only when (i) both counterparties to a transaction are established outside the EU; and (ii) the rules in both jurisdictions are not considered to be equivalent to EMIR; and either (a) one of the counterparties is guaranteed (above certain thresholds) by an EU financial counterparty; or (b) both counterparties execute the transaction via their EU branches. There are also anti-evasion provisions requiring business substance and economic justification for the use of non-EU counterparties to the transaction.

The European Commission has extended the deadline for ESMA to submit to the Commission the draft RTS on the cross-border application of EMIR from 25 September to 15 November. The extension has been given to allow ESMA sufficient time to analyse the responses to its consultation.

The consultation paper is available at:

http://www.esma.europa.eu/system/files/2013-892_draft_rts_of_emir.pdf

Our client note on this advice is available at:

http://www.shearman.com/files/Publication/883da34d-a9f3-498f-818c-779e72a639e8/Presentation/PublicationAttachment/6fa85fbd d6af-4e31-9c53-921470cc7441/ESMA-Consults-on-Extraterritoriality-FIA-080513.pdf

RTS on CCP Colleges Published

The secondary legislation under EMIR setting out the operational organisation and governance of supervisory colleges that must be set up to consider the application of a CCP for authorisation was published in the European Official Journal (Commission Delegated Regulation (EU) No 876/2013 of 28 May 2013 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to regulatory technical standards on colleges for central counterparties, "Delegated Regulation"). The Delegated Regulation came into force on 3 October 2013.

The Delegated Regulation is available at:

http://new.eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2013.244.01.0019.01.ENG

ESMA Publishes Updated FAQs on the Implementation of EMIR

On 5 August 2013, ESMA updated the FAQs on the implementation of EMIR. New questions included in the update relate to funds as counterparties to a derivative contract, back-to-back client contracts, the status of third country entities, portfolio reconciliation, dispute resolution requirements, the role of chief risk officer, chief compliance officer and chief technology officer in CCPs and allocation of resources by CCPs. Other issues covered in the update cover the calculation of the clearing threshold, timely confirmations, intragroup transactions in relation to Commission equivalence decisions, the hedging definition and segregation and portability.

The updated FAQs are available at:

http://www.esma.europa.eu/system/files/2013-1080_qa_iii_on_emir_implementation.pdf

European Commission Publishes Further Proposals to Fight against Fraud

On 17 July 2013, the European Commission published two legislative proposals to further strengthen the EU's fight against fraud:

  • a proposal on the establishment of the European Public Prosecutor's Office, which aims to strengthen the procedural framework to deal with offences affecting the EU's financial interests, covering the status and structure of the new EU office with investigation and prosecution functions, rules and procedures governing investigations, prosecutions and trial proceedings, judicial review and data protection; and
  • a proposal on the European Union Agency for Criminal Justice Cooperation (or Eurojust) which aims to improve the operation and efficiency of the agency, which was first established in 2002 and which facilitates coordination and cooperation between Member State investigative and prosecutorial authorities. These proposals link to the European Commission's legislative proposal on the fight against fraud for the financial interests of the EU by means of criminal law, published in July 2012, which sets out harmonised criminal law provisions for preventing and fighting fraud. All three proposals are now subject to the EU legislative process.

The proposals are available at:

http://ec.europa.eu/justice/criminal/files/regulation_eppo_en.pdf; and

http://ec.europa.eu/justice/criminal/files/regulation_eurojust_en.pdf

To read this article in full please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Shearman & Sterling LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Shearman & Sterling LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions