1. Welcome to Euro Shorts, a short briefing on some of the week’s developments in
the financial services industry in Europe.
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
claire.cummings@cummingslaw.com
www.cummingslaw.com
FCA’s new MiFID II webpages
The FCA has published a set of new webpages on MiFIR which are
designed to help keep people up to date on developments relating to MiFID
II. The webpages address a number of topics, including: (i) what firms will
need to do; (ii), a summary of the significant changes proposed to the
Markets in Financial Instruments Directive; (iii) the MiFID II legislative
process; (iv) MiFID II implementing measures and transparency
calculations; and (v) ESMA’s consolidated list of trading venue
identification codes. Those interested in receiving MiFID II email updates
from the FCA can register with the FCA via its website.
FTT
It has been reported that finance ministers from 11 eurozone countries plan
to form a legal basis for a phased-in tax on financial transactions that would
be implemented in 2016. Meanwhile, the German Finance Minister
Wolfgang says a proposed tax on financial transactions in 11 eurozone
nations should first tackle shares and certain derivatives and in the UK,
George Osborne has said that the UK is within its rights to challenge the
FTT should it affect non-participating European countries. It is reported that
the UK’s legal challenge might be backed by Sweden as its dissatisfaction
with the proposal grows. The Swedish Finance Minister Anders Borg is
quoted as saying "We did not support the U.K. when they started this legal

2. case; we are much closer to doing that, because the process has not been
satisfactory during these last few months."
Think tank comments on UK economy
The National Institute of Economic and Social Research (NIESR) said
"robust" growth helped the economy to expand by between 1pc and 1.2pc in
the three months to April, saying that the UK is close to the pre-recession
peak. The NIESR predicts growth continuing and being fuelled by
consumption growth.
EMIR frontloading requirements
ESMA has written to the European Commission informing the Commission
of its intention to ease certain frontloading requirements under EMIR. The
frontloading requirement is the obligation to clear certain OTC derivative
contracts entered into after a CCP has been authorised under EMIR and
before the date of application of the clearing obligation. Under the
frontloading rules, a contract concluded on a bilateral basis following
authorisation of a CCP might become subject to the central clearing
obligation before its expiration date. ESMA believes that the frontloading
procedure creates uncertainties for derivatives end-users while the exact
terms of the clearing obligation have not been defined.. ESMA therefore
intends to establish the frontloading requirement in a way that will minimise
the uncertainty.
Proposals for best practices for T2S markets' migration to T+2
On 6 May 2014, the ECB published proposals by the TARGET2-Securities
(T2S) Harmonisation Steering Group (HSG) for best practices for T2S
markets migrating to the T+2 settlement cycle on 6 October 2014. The HSG
established a task force on T+2, whose primary aim is to ensure co-
ordination across T2S regarding the change in settlement cycle and to
minimise the impact of moving to T+2 for market participants. The
proposals are set out in the following three sections: (i) Section 1 covers the
scope of the T+2 settlement cycle; (ii) Section 2 focuses on the migration
plans of markets to move to the T+2 rule; and (iii) Section 3 aims to provide
some ideas in the context of the move to T+2 for the timely completion of
the post-trade and pre-settlement activities, as well as the monitoring of
matching timeliness and settlement fails. The ECB has also published a

3. letter from the chairmen of HSG and T+2 task force to ESMA’s Head of
Markets Division. Among other things, the letter states that in addition to the
ECB, the HSG has also sent the proposals to ESMA and the European
Commission for their consideration.
FCA policy statement on competition in the markets for services
provided by a regulated investment exchange
The FCA has published a policy statement on competition in the markets for
services provided by a recognised investment exchange (RIE) (PS14/6). The
FCA has previously consulted, and the policy statement provides feedback
on responses and sets out the changes to the FCA's Recognised Investment
Exchange and Recognised Clearing House sourcebook (REC). One
modification amends its proposed change to REC 6.7 (notification rules for
overseas recognised bodies) to limit the scope of the obligation to events
having a "material" effect on competition to bring this in line with the rule
applicable to UK RIEs. The handbook instrument, which is included in an
appendix to the policy statement, also provides that the change to REC
3.26G (proposals to make regulatory provision) comes into effect on 2 June
2014, giving UK RIEs some time to review and update their procedures for
making notifications. The other changes to REC came into effect on 2 May
2014.
Designation of global systemically important reinsurers postponed to
November 2014
The Society of Lloyd's has updated its webpage on systemic risk to report
that it has recently been announced that the list of major reinsurers
designated as systemically important has been further delayed from July
2014 to November 2014. The Lloyd's webpage states that the International
Association of Insurance Supervisors has said that, whereas the
methodology for the first nine global systemically important insurers
focuses on non-traditional or non-insurance activities, for reinsurers the
issues relating to substitutability and interconnectedness are more complex
than for insurers and require further study and analysis.

4. Markit IPO
The press reports that London-based Markit has filed for an initial public
offering in the US.
ECB comments on inflation
The European Central Bank has delayed any concrete measures to stop the
eurozone sliding towards deflation. However, it has both indicated action in
June and issued a stark warning about the euro exchange rate with Mario
Draghi, the ECB’s president, saying “The strengthening of the euro in the
context of low inflation and still low levels of economic activity is a serious
concern. The exchange rate will have to be addressed.”
Upcoming event
On 21 - 22 May 2014 the FCA Transaction Reporting Forum will be held,
attendance expected those FCA regulated firms which have with
responsibility for transaction reporting. To register please go to
http://fca.cvent.com/events/transaction-reporting-update/event-summary-
3909e156e91c4b9cb34e685ff161ec84.aspx
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
9 May 2014