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

www.cummingslaw.com

Updated privacy policy for Cummings Law

Cummings Law has updated its privacy policy in relation to the GDPR, which comes into force on the 25th May 2018.  Our privacy policy can be found on our website at the following link: https://cummingslaw.com/privacy-policy.

FCA “Dear CEO” letter to banks on crypto-assets and financial crime

The FCA published a “Dear CEO” letter to banks on how to handle the financial crime risks posed by crypto-assets in which the FCA advises banks offering services to current or prospective clients who derive significant business activities or revenues from crypto-related activities that it may be necessary to enhance their scrutiny of these clients and their activities.  For further information on this letter, please see our Legal Long on this matter, available on our website at: https://cummingslaw.com/legal-shorts.

Money Market Funds Regulations 2018 published

On 11 June 2018, the Money Market Funds Regulations 2018 were published on legislation.gov.uk, together with an explanatory memorandum.  The Regulations relate to the Regulation on money market funds and they enable the FCA to authorise MMFs and enforce the provisions of the MMF Regulation when it comes into force on 21 July 2018. 

The Regulations amend: (i) FSMA to provide powers of authorisation and intervention for the FCA in respect of unit trust funds and contractual schemes, both of which may be types of MMF; (ii) Open-Ended Investment Companies Regulations 2001 to allow funds that are OEICs to apply to become MMFs, or for funds that apply to be authorised as an OEIC to be authorised as an MMF at the same time;  (iii) Alternative Investment Fund Managers Regulations 2013 to make provision for the FCA to direct the manner in which an application may be made for an alternative investment fund to be authorised as an MMF, and the process for intervention by the FCA in respect of such a fund; and (iv) Financial Services and Markets Act 2000 (Qualifying European Union Provisions) Order 2013 by inserting the MMF Regulation to enable the FCA to investigate and bring enforcement action against funds directly for breach of the MMF Regulation.  The Regulations include a review provision requiring HM Treasury to carry out a review of the regulations relating to the above from time to time, and publish a report setting out the conclusions of the review by 21 July 2023.

ICO adds guidance on GDPR’s seven key principles to its Guide to the GDPR

ICO has added guidance on the GDPR seven key principles to its Guide to the GDPR.  The guidance: (i) lists the seven key principles in the GDPR (including accuracy, data minimisation and accuracy) and expands on what each of the principles means with examples; (ii) outlines the three key changes, namely that there are no principles for individuals’ rights or the international transfers or personal data (as these are dealt with separately in Chapters III and V of the GDPR) and the existence of the new accountability principle; and (iii) compares the GDPR principles with those introduced under the Data Protection Act 1998.

Government responds to report on growing culture of social impact investing in UK: financial services aspects

The Department for Digital, Culture, Media and Sport (DCMS) has published the government response to a report by an independent advisory group on growing a culture of social impact investing in the UK.  The response sets out the government’s position on each of the five themes outlined in the report.  Among other things, the government is committed to: (i) partnering with and providing support to the financial services industry to help build social impact capabilities among investment professionals; (ii) consulting on changes to regulation to allow for consideration of broader financial risks and opportunities, including those related to environmental, social and governance issues; and the FCA is also considering what form of rule changes may be appropriate to address proposals relating to requiring independent governance committees to report on firms’ policies on evaluating long-term investment risks; and (iii) considering what more can be done to increase consideration of the wider impacts of pension investments, environmental and social, as well as financial.  An accompanying press release states that the government will continue to work alongside the financial services industry and regulators and will provide a progress update in winter 2018.

European Parliament adopts EMIR Refit Regulation

The European Parliament has published a press release announcing that it has voted in plenary to adopt the proposed Regulation amending EMIR.  The proposed Regulation will simplify clearing rules for small and non-financial counterparties and provide a temporary exemption for pension scheme arrangements from the mandatory clearing of derivatives.  ECON published its report on the proposed Regulation on 25 May 2018 and voted to adopt the report on 16 May 2018.  The next step is for the proposed Regulation to be considered by the Council of the EU and the European Commission, which is due to happen in July 2018.

FCA policy statement on premium listing category for sovereign controlled companies

The FCA recently published its policy statement entitled Sovereign Controlled Companies: Feedback to CP17/21 and Final Rules. Listing Rule 21 creates a fourth category of premium listing available to companies that have a sovereign controlling shareholder. The FCA states that this listing category is intended to maintain the standards of the existing premium regime, but tailored to the nature of the sovereign controlling shareholder, retaining the key components of the premium regime with variation when this can be directly linked to the nature of the sovereign controlling shareholder.  In response to concerns raised in relation labelling sovereign controlled companies as a premium thereby increasing the likelihood of UK index inclusion, the FCA notes that while premium listing is a requirement for inclusion in the FTSE UK index series, not all premium listed companies are included. Inclusion will depend on the other relevant index inclusion criteria, including free float and nationality requirements.

 

UKLA guidance notes: Primary Market Bulletin No 19

The FCA recently published its 19th Primary Market Bulletin to consult on changes to the UKLA Knowledge Base.

Specifically, the FCA is consulting on a proposed update to the existing technical note on periodic financial information and inside information.  The proposed amendments are extensive and they centre on the issue of identifying and handling inside information during the preparation of periodic financial reports. Issuers preparing periodic financial reports should assess on an ongoing and case-by-case basis whether the information they hold fulfils the criteria defining “inside information” as set out in Article 7 of MAR. Issuers should: (i) work on the assumption that information relating to financial results could constitute inside information; (ii) exercise judgment, and conduct the ongoing assessment in good faith; and (iii) record and be able to submit evidence of the assessment process to the FCA upon request.  Issuers should also assess on an ongoing and case-by-case basis the extent to which the delay of disclosure of inside information is likely to mislead the public.