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.


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:∂=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:

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:

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:

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:

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

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:

Our client note on this advice is available at: 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:

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:

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:; and

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

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

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.