Financial Services Europe and International Update, November 2010, Issue 6.

In its plenary session on 11 November 2010, the European Parliament approved the Alternative Investment Fund Managers Directive (AIFM Directive) in its 27 October 2010 form. EU finance ministers are formally to approve the text on behalf of the Council later this month or early December. It will then go to the jurist translators to be tidied up and translated into the various official languages. It is due to be published in the Official Journal in the first quarter of 2011, although this timetable may prove unrealistic in view of the three months allowed for tidying and translating.

Prior to the vote, the Parliament published a background note on the AIFM Directive which includes details about the marketing passport for non-EU alternative investment fund managers (AIFMs) and non-EU alternative investment funds (non-EU AIFs), including what role the new European Securities and Markets Authority (ESMA) will have in relation to the passport.

The note also contains a timeline which sets out provisional dates for when the AIFM Directive will enter into force and when the marketing passport for non-EU AIFMs and non-EU AIFs will be examined by ESMA.

Capital Requirements Directive: UK Treasury Provides Transposition Tables

HM Treasury has published on its website two transposition tables setting out how the main provisions of the Capital Requirements Directive (Directives 2006/48/EC and 2006/49/EC), as amended by the CRD 2 (Directive 2009/111/EC), have been transposed in the UK.

The Capital Requirements (Amendment) Regulations 2010 were made on 28 October 2010 and come into force on 31 December 2010.

Credit Rating Agencies: Public Consultation to Cover Gaps in the CRA Regulation

The European Commission has issued a public consultation on credit rating agencies with a view to dealing with some issues which are not covered in the new regulation on credit rating agencies which is due to come into force on 7 December 2010 (Regulation EC/1060/2009). This consultation looks at:

  • the possible risks arising from overreliance on credit rating by financial markets participants;
  • the high degree of concentration in the rating market;
  • the absence of civil liability of credit rating agencies in the CRA Regulation; and
  • conflicts of interest due to the remuneration models used by the credit rating agencies.

Comments should be sent by 7 January 2011.

G20 Summit Issues: Joint Letter from Commission President Barroso and European Council President Van Rompuy

The European Commission has published a press release which sets out the text of a joint letter from European Commission President Barroso and European Council President Van Rompuy to the G20 leaders.

The letter sets out their views on key issues on the agenda of the G20 Summit in Seoul. As regards financial services regulatory reform Barroso and Rompuy make the following statements.

The European Union fully supports the new agreement on capital and liquidity standards (Basel III) and its implementation should be strictly monitored.

The policy recommendations by the Financial Stability Board on systemically important financial institutions and on reducing reliance on credit rating agencies should be endorsed.

Strict implementation of the FSB compensation standards should be reaffirmed.

Further work on regulatory reforms should be pursued including those relating to effective crossborder crisis management, commodity derivatives, market integrity and shadow banking.

The EU will continue to support work in the G20 to explore and develop a financial transaction tax at global level. However, further work needs to be done on other ways of ensuring that the financial sector makes an equitable contribution, through measures such as a financial activities tax and levies.

Remuneration Code: FSA Delays Publication of Policy Statement on Revising its Remuneration Code

The FSA is to delay publication of the policy statement to its July 2010 consultation paper on revising its remuneration code (CP10/19) until around 11 or 12 December 2010.

In a statement sent to key firms and trade associations, the FSA said it felt unable to release its policy statement before the Committee of European Banking Supervisors' (CEBS) had finalised its guidelines on implementation of the remuneration principles in the amendment to the Capital Requirements Directive (2006/48/EC and 2006/49/EC) known as "CRD3" on 9 or 10 December 2010. The FSA considers that it has a duty to bear CEBS's guidelines in mind in its implementation process.

In spite of this delay, the revised FSA remuneration code is still due to come into effect on 1 January 2011.

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