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
Eurex receives authorisation under EMIR
Eurex Clearing, Deutsche Borse’s clearing house, has become the fourth
central counterparty (CCP) to receive authorisation under EMIR after
receiving approval from BaFIN this week. Eurex is one of the largest post-
trade providers in Europe and clears products including cash equities, bonds
and derivatives. The authorisation follows that of Nasdaq OMX, EuroCCP
and Polish post-trade provider KDPW. According to reports, Eurex
Clearing’s approval was delayed in part due to legal issues around how it
ring-fences client assets and it was required to ensure that the way it protects
buyside assets was compatible with bankruptcy laws in each Member State.
Nasdaq's approval last month means the clearing of European swaps could
begin by December at the earliest, if the subsequent regulatory process runs
smoothly.

2. IMF praises UK economy growth
The International Monetary Fund has predicted that the UK economy will
grow faster than any other leading economy this year. This is in contrast with
its criticism last year of George Osborne’s austerity policies, when it claimed
that he was ‘playing with fire’. The IMF has raised its forecast for UK
growth to 2.9% this year, which is the fastest of any G7 country. The
upgrade is almost double the IMF’s prediction a year ago and the IMF
praised Mr Osborne for sticking to his fiscal plan.
Greece success in the bond markets
Greece returned to the bond market this week and issued €3 billion of five-
year bonds. The return was considered a great success for Greece, with the
bonds yielding 4.95%; this is the second lowest borrowing costs for a bailed-
out eurozone state. According to reports, the bonds attracted investors
because they offer a relatively high return in an era of ultra-low interest
rates. Expectations that the European Central Bank will take further steps to
boost the euro zone economy are also fuelling appetite for bonds issued by
the bloc's riskier countries.
German finance minister warns of complacency
The German finance minister Wolfgang Schaeuble said this week that
Europe is on the way to recovery, but that it would be wrong to assume the
crisis is over, adding that ‘the most risk is always complacency’. He also
reacted to IMF advice to boost investment by saying he ‘can't bear hearing’
the debate over fiscal austerity versus pro-growth policies anymore. He was
speaking a day after the IMF again encouraged Germany to invest more to
boost domestic demand and after Mr Schaeuble promised a balanced budget
from next year. The IMF advice is in line with that of the European
Commission and the OECD, which both want Europe's biggest economy to
boost demand at home.

3. Eurozone budgetary rules at risk
The Bundesbank’s president has warned that the credibility of the eurozone's
budgetary rules is at stake and that France's suggestion that the bloc's budget
deficit targets be weakened are a test case for the rules. The warning came in
response to France's new finance minister, Michel Sapin's comment last
week that the country would seek a review of its deadline for meeting the
EU's budget deficit ceiling of 3%. The president said that it was vital the EU
stick to the rules, because their credibility of the rules was otherwise at
stake. He added that a currency union needed its members to aim for
stability and that part of that was having an orderly budget and sticking to
the rules.
Single-member private company proposed directive
The European Commission has published a proposal for a directive on
single-member private limited liability companies. The proposed directive
will require member states to provide in their national company law for a
form of single-member limited liability company to be established, which
will be known as a SUP (Societas Unius Personae). The proposed directive
sets out various features of SUPs that member states must provide for within
their national laws, including in relation to electronic registration, share
capital, the articles, distributions and single-member decisions. The proposal
will next be considered by the Parliament and the Council under the ordinary
legislative procedure. It is intended that the proposed directive must be
implemented within two years of adoption.
UK interest rates on hold
The Bank of England has kept UK interest rates on hold at their record low
of 0.5% for another month. No change had been expected, despite recent
evidence of the UK’s recovery. The recent fall in the rate of inflation has
also reduced any pressure on the Bank's monetary policy committee to raise
rates. The UK's inflation rate fell to 1.7% last month, which was a four-year
low and below the Bank's target of 2%.

4. Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
11 April 2014