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Legal Shorts 10.11.17 including MiFID II Event and MiFID II: FCA guidance on trading venue notifications

Published: 10 Nov 2017

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Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services industry.

If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.  

Claire Cummings

020 7585 1406



MiFID II Event

Claire Cummings will be speaking at a panel session hosted by HFM on the impact of MiFID II on dark pool trading. The discussion will take place in London on 23 November 2017.  If you would like more details about the event, please e-mail Claire at: claire.cummings@cummingslaw.com.

MiFID II: FCA guidance on trading venue notifications

The FCA has published guidance on trading venue notifications under MiFID II, which is intended to expand on the FCA's application and notification user guide published in January 2017. The guidance covers the notifications that should be made by trading venues (i.e. RMs, MTFs and OTFs) and sets out the FCA's expectations of what trading venues should notify, why the information is required, the form in which notifications should be made and the timings for notification. The guidance contains material on notifications relating to, among other things: (i) post-trade deferrals; (ii) trading suspensions, removals and restorations under Articles 32 and 52 of MiFID II; (iii) parameters for halting of trading; (iv) severe trading interruption not due to market volatility and any other material connectivity disruptions; and (v) significant rule infringements, disorderly trading and conduct that may involve market abuse or system disruptions.

MiFID II: industry standard on commodity derivatives position reporting

The Futures Industry Association and the European Federation of Energy Traders  have published common schema for commodity derivatives position reporting under MiFID II. The EFET-FIA state that they have developed the schema in close co-operation with a number of trading venues, explaining that the EFET-FIA schema is intended to complement the format of the UK FCA schema designed for the reporting of positions by trading venues to the FCA. The EFET-FIA schema adds some additional fields to allow for the delivery of supplementary information from market participants to the trading venues that are subject to the commodity derivative position reporting obligation.

MiFID II: FMLC highlights legal uncertainties on commodity derivatives positions

The Financial Markets Law Committee (FMLC) has requested clarification from ESMA on the manner in which commodity derivative positions are to be aggregated. MiFID II requires position limits to be set on the basis of all positions held by a person, and those held on its behalf at an aggregate group level, and directs ESMA to develop methods to determine when the positions of a person are to be aggregated within a group. In the context of ESMA’s RTS in this respect, the FMLC considers there to be legal uncertainty as to the meaning of "control" when aggregating positions between a parent undertaking and its subsidiaries. In essence, the FMLC considers it is a matter of uncertainty as to whether, under RTS 21, the word "control" is meant as a proxy for a parent and subsidiary relationship. The FMLC recommends that ESMA provides guidance as to what control means in this context.

IA principles for remuneration 2018

The Investment Association has published a revised version of its principles for remuneration for 2018. Changes from the October 2016 version include: (i) remuneration policies should be set to promote long-term value creation, rather than simply value creation; (ii) any discretion specific to a particular incentive scheme should be disclosed in the remuneration policy in addition to the plan rules; (iii)  in relation to shareholder consultation on changes to remuneration, a requirement that remuneration committees should provide details of the whole remuneration structure, not just proposed changes; and (iv) in relation to annual bonuses, a new requirement that the definition of any performance measure should be clearly disclosed. Amongst other things, the IA will focus on levels of remuneration and remuneration structures in 2018.


The Central Securities Depositaries Regulations 2017 have been published which implement, in part, the Regulation on improving securities settlement and regulating central securities depositories (CSD Regulation). Specifically, they: (i) contain competent authority designations of the Bank of England and the FCA in relation to the CSDR; (ii) create a new type of recognised body under FSMA known as recognised central securities depositories (RCSDs); (iii) put in place procedures in connection with the acquisition of control over RCSDs; and (iv) require institutions to have appropriate procedures in place for the reporting of infringements. The Regulations come into force on 28 November 2017.

FCA speech on robo advice

The FCA has published a recent speech giving the FCA's perspective on robo advice and points of interest include: (i) it is still uncertain whether a typical model might emerge that is a hybrid of human plus automation, rather than purely robo advice; (ii) the FCA's supervision of robo advice models and their algorithms focusses on outcomes, which means that it looks at what the model generates; and (iii) in the context of authorisations, applicants can expect to see critical challenge on the client journey and other aspects of robo models. The FCA has been monitoring developments and will be undertaking assessments of some of the active market distributors in the investment sector "over the next few months".

FCA consultation on industry codes of conduct

The FCA has published a consultation paper on industry-written codes of conduct in relation to unregulated markets and activities (CP17/37). The FCA recognises that, for markets and activities not covered by regulatory rules and Principles, its expectations may not be clear and it is therefore consulting on its approach to supervising adherence to proper standards of market conduct for unregulated markets and activities, including standards set out in industry codes of conduct. The FCA proposes a "general approach" to supervising and enforcing its senior managers and certification regime (SM&CR) rules for authorised firms' unregulated activities, including those covered by industry codes. The FCA also proposes to publicly recognise particular industry codes that it considers set out proper standards of market conduct for unregulated markets and activities. Comments are invited by 5 February 2018. The FCA expects to publish a policy statement in the second quarter of 2018.

ESMA updates Q&As on Benchmarks Regulation

ESMA has updated its Q&As on the implementation of the Benchmarks Regulation. It has added two new Q&As which relate to: (i) scope of the Benchmarks Regulation: application of the Benchmarks Regulation outside the EU (Q&A 4.3); and (ii) transitional provisions applicable to third country benchmarks (Q&A 6.3). ESMA first published the Q&As in July 2017 and previously updated them in September 2017.

FATF final guidance on information sharing

FATF has published final guidance for private sector information sharing. The aims of the guidance include highlighting the usefulness of information sharing among financial institutions, identifying the key challenges that inhibit sharing of information and clarifying the June 2016 FATF consolidated standards on information sharing. The guidance applies to countries and their AML and CTF authorities, practitioners in the private sector, including financial institutions that have group-wide AML and CTF obligations to fulfil, and national and supra-national data protection and privacy authorities. The guidance considers general issues, such as data protection and privacy frameworks, and operational challenges, such as IT capability and record-keeping, and sets out the expectations of the key FATF recommendations relating to information sharing within financial groups and to information sharing between financial institutions that are not in the same group. FATF consulted on a draft version of the guidance in June 2017.


This week, Kevin Cummings, Hedge Fund Tax Partner at Deloitte LLP, provides us with a short summary of the imminent changes to the tax treatment of partnerships and LLPs, as follows:

“The next Finance Bill to go through Parliament will make yet further changes to the tax treatment of partnerships.  Notwithstanding that the tax rules on partnerships and LLPs have been tightened considerably over the past five years, the Government considers that there is still room for partnerships to manipulate the allocation of taxable profits to obtain a tax advantage.  Accordingly, the measures make clear that partnerships/LLPs can no longer allocate profits for tax purposes in a manner that is inconsistent with the allocation of commercial profits – a proposal that has been relatively contentious where partners are currently expected to bear the cost of their own disallowable expenses (such as personal gym memberships, say) – the new rules require the tax disallowance to be spread among all partners.  

And there are other changes, some of which are likely to increase the compliance burden for fund partnerships – for instance, a partnership that has a partner that is itself a partnership will be required to include (for each participating partnership) a share of the participating partnership’s profit or loss calculated on income tax principles and corporation tax principles (and on the basis that the partner could be a resident/non-resident individual or company) in the event that the fund partnership does not specifically identify all the direct/indirect partners.  

There are other measures too which may impact manager LLPs or their funds, where structured as partnerships and with UK investors.” 

If you would like to receive further information regarding the tax treatment of partnerships and LLPs or any other related matters, please contact Kevin Cummings at: kcummings@deloitte.co.uk.


Tel: + 44 20 7585 1406

Mob: + 44 7734 057 327


10 November 2017

Firm: Addleshaw Goddard

Practice Area: Trade & Customs

  • 42 Brook Street
    W1K 5DB

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