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Legal Shorts 08.09.17 including event in New York and MiFID II: AFME opinion on share trading obligation

Published: 08 Sep 2017

Claire Cummings

020 7585 1406




Claire Cummings will be speaking at a panel discussion in the US on ‘Differences in Marketing to US and UK Investors’ to be held jointly by Cummings, Portman Compliance, Alston & Bird, Adherence, LLC and Peregrine Communications. The event will be held at the offices of Alston & Bird in New York on Tuesday, 26 September 2017. If you would like more details about the panel discussion, please e-mail Claire at: claire.cummings@cummingslaw.com.

MiFID II: AFME opinion on share trading obligation

The Association for Financial Markets in Europe has published a paper setting out its view on the scope of the requirement in Article 23 of MiFIR for certain share trades to be carried out only on specified regulated trading venues. The requirement applies to an investment firm when it "undertakes" trades in certain shares. In AFME's view, this means that it applies only to a firm when it is the final entity in the chain of execution in any given trade flow. However, a firm that places an order with or transmits an order to a third party for execution, or is a passive intermediary, should not be caught by the obligation, as it does not "undertake" the trade.

MAR: ESMA updates Q&As

ESMA has published an updated version of its Q&A on the Market Abuse Regulation. Among other things, ESMA has added a question relating to market soundings (new Question 9.1) and two questions relating to insider lists (new Questions 10.1 and 10.2). The new question on market soundings asks whether all communications of information to potential investors prior to the announcement of a transaction to gauge their interest in a possible transaction are caught by Article 11 of MAR (Market soundings). ESMA's answer to the question distinguishes between situations where the financial instrument the subject of the possible transaction is already admitted to trading (or where a request for admission to trading has been made) or traded on a trading venue (when the transaction would fall within the scope of Article 11) and those where it is not (when the instrument would not fall within Article 2(1)(a)-(c)). Of the two new questions on insider lists, the first relates to whether persons acting on behalf of or on account of an issuer, such as advisers and consultants, are subject to the obligation to draw up, update and provide upon request their own insider lists under Article 18(1) of MAR, and the second discusses the circumstances in which an issuer remains responsible for compliance.

Brexit update: AFME paper on transitional arrangements

AFME has also published a paper on transitional arrangements in financial services following Brexit. In the paper, AFME highlights cliff-edge risks relating to the recognition of CCPs, existing cross-border contracts and data transfers once the UK becomes a third country. It suggests that the design of transitional arrangements should contain the following elements: (i) existing market arrangements should be maintained during the transitional period i.e. existing legislation, regulation, permissions and authorisations should continue to be effective during the transitional period; (ii) the EU and the UK government should at least commit by the end of 2017 on the principle of a transitional period in a formal political joint statement; and (iii) the transitional arrangements should consist of a bridging period, which would cover the period from the expiry of the Article 50 period to the date on which the new relationship between the UK and the EU is ratified, and an adaptation period that would enable phased adjustment to the new trade relationship. AFME also suggests a number of transitional measures intended to minimise disruption, which includes the grandfathering of cross-border trades and contacts executed before Brexit that will continue after Brexit.

Key developments expected in September 2017

Key developments expected in September 2017 include the following: (i) the EBA is expected to submit its final advice to the European Commission on new prudential framework for investment firms; (ii) the FCA is expected to publish a response to FCA guidance consultation on implementation of part 1 of the financial advice market review (FAMR); (iii) the deadline for responses to FCA consultation paper on implementing asset management market study remedies and changes to the Handbook (CP17/18) closes on 28 September 2017; and (iv) the deadline for responses to the Department for Digital, Culture, Media and Sport's consultation paper on implementing the Directive concerning measures for a high common level of security of network and information systems across the EU (Cyber-security Directive) closes on 30 September 2017.

We   have taken great care to ensure the accuracy of this version of Legal Shorts.   However, Legal Shorts is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the   information it contains. No responsibility can be taken for any loss arising from, action taken or refrained from on the basis of this publication. If you would like to be removed from the mailing list of this publication please click unsubscribe below. Nothing within this communication may be copied, re-printed or similar without prior written consent from Cummings.

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Tel: + 44 20 7585 1406

Mob: + 44 7734 057 327


8 September 2017

Firm: Addleshaw Goddard

Practice Area: Trade & Customs

  • 42 Brook Street
    W1K 5DB

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