The document provides a summary of recent legal and regulatory developments in the UK financial services industry. Key points include the Chancellor's Autumn Statement which supported peer-to-peer lending and crowdfunding, changes to stamp duty, and using bank fines to fund GP practices. Other summaries discuss FCA guidance on AIFM reporting, ESMA consulting on asset segregation under AIFMD, and the FCA establishing a new webpage for crowdfunding platforms.

1. 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 claire.cummings@cummingslaw.com www.cummingslaw.com
Chancellor’s 2014 Autumn Statement
George Osborne delivered his 2014 Autumn Statement this week and key points of interest for the financial services industry include: (i) support for peer-to-peer and crowdfunding platforms through a package of measures to remove barriers to their growth from regulation and tax rules; (ii) a change in stamp duty from the so-called ‘slab system’ to a progressive system, under which SDLT is charged at several rates according to the portion of the total consideration falling within each of several bands; (iii) support for alternative finance providers by naming the big banks that will be required to open up access to their credit data and refer on any small and medium-size enterprises (SMEs) that they turn down for finance; (iv) a restriction on the amount of profit banks can apply to offset corporation tax liability by limiting carried-forward losses to 50%; and (v) fines collected from the banks found guilty of manipulating the FX and LIBOR benchmarks will be used to fund GP practices in England.

2. FCA updates Q&As for AIFMs on reporting
The FCA has updated its Q&As on reporting transparency information to the FCA. The aim of the Q&As, which were first published in October, is to provide information to AIFMs about: (i) who is required to report transparency information; (ii) what transparency information must be reported; (iii) how the FCA will collect transparency information; (iv) registering and using GABRIEL to report transparency information; and (v) key dates on which FCA systems will support reporting of transparency information. The updated version includes two a new Q&As, which relate to the application of AIFMD reporting and transparency requirements to AIFMs managing AIFs after 22 July 2014 under the amended transitional arrangements and the identification of share classes where an AIF has multiple share classes. The FCA advises that the Q&As summarise key information and do not constitute FCA rules or guidance.
ESMA consults on asset segregation under AIFMD
ESMA is consulting on guidelines on asset segregation under the AIFMD as set out in Article 21 of the AIFMD and Article 99 of the AIFMD Level 2 Regulation. ESMA has produced the guidelines in response to questions on whether those assets which can be held in such an account are only those assets which come from the same delegating depositary or, alternatively, whether the omnibus account can hold assets for AIF clients coming from different delegating depositaries. In the guidelines, ESMA seeks views on two alternative options, these being: (1) that the account on which the AIF's assets are to be kept by the delegated third party may only comprise assets of the AIF and assets of other AIFs of the same delegating depositary, with assets of AIFs of other depositaries considered as assets of the third party's "other clients" for the purpose of Article 99(1)(a); or (2) that a delegated third party holding assets for multiple depositary clients would not be required to have separate accounts for the AIF assets of each of the delegating depositaries. Comments are invited by 30 January 2015.
New FCA webpage for crowdfunding platforms
The FCA has published a new webpage summarising rules for firms operating in the loan-based crowdfunding (including peer-to-peer (P2P) and peer-to-business (P2B)) market when considering their investment activities. Among other things, the webpage states that the summary only relates to requirements relating to investment activities. In addition, it does not constitute formal guidance and does not have the status of guidance in the FCA Handbook. Firms are advised that other FCA rules and legislation will

3. also be relevant for some firms depending on their business models and they may need to seek their own advice as to specific rules that apply to them.
UCITS V
ESMA has published its final report setting out technical advice to the European Commission on delegated acts on depositaries required by UCITS V. Issues ESMA advises on are: (i) the insolvency protection of UCITS assets when delegating safekeeping, in relation to which ESMA proposes measures, arrangements and tasks for the third party to which custody is delegated as well as measures to be put in place by the depositary; and (ii) the independence requirement. ESMA identifies two types of link between the management company or investment company and the depositary (namely, common management and supervision, and cross-shareholdings between these entities), which may jeopardise their independence and recommends measures to address the risks that may arise.
FCA consulting on MTF rulebooks
The FCA has published a guidance consultation (GC14/9) on requirements in chapter 5 of the Market Conduct sourcebook (MAR) relating to the rules of multilateral trading facility (MTF) operators. The guidance sets out the approach MTF operators should take to rules in MAR 5 relating to MTF rulebooks, instrument eligibility criteria, participant eligibility and access criteria, finalisation of transactions, monitoring compliance with MTF rules and reporting requirements. The FCA expects all MTF operators to be able to demonstrate that they have considered the good practice observations when determining their approach to compliance with MAR 5. In particular, it expects MTF operators to have rulebooks that are will be publicly available on their websites. Comments are invited by 16 January 2015.
FCA calls for cultural changes in the financial services industry
Martin Wheatley has called for urgent action in the financial services industry to establish a culture that "aims for the right outcomes". He notes that firms have tended to focus on risks that are easier to quantify such as market risk and conduct risk rather than conduct risk. He comments that, in practice, it is impossible to create a formula for assessing conduct risk and that regulators should not attempt to codify the limits of what is, or is not, morally acceptable. However, the industry should not need a rule book to

4. distinguish right from wrong. Tracey McDermott, Director of Enforcement and Financial Crime at the FCA, echoed this, by calling for a cultural change in the approach of financial institutions. She said that individuals should make the right decision instinctively because they believe that is what is valued by their peers, their colleagues and their firms and because they will be ostracised if they do not.
FCA extends ONA accessibility until further notice
Contrary to its recent email communication to firms advising them that draft applications in ONA would only be accepted until 6pm, Friday 28 November 2014, as reported in last week’s Legal Shorts, the FCA has now stated that changes to ONA will no longer take place on this date due to technical issues. The FCA has advised firms that they will still be able to submit and access draft applications in ONA until further notice and that a further update on the status of ONA will be provided in due course.
EU Council considers SFT and short selling Regulations
The EU Council has issued a press release following its consideration of the proposed Regulation on securities financing transactions (SFT Regulation) and the Commission Delegated Regulation on the notification of significant net short positions in sovereign debt (Short Selling Delegated Regulation). With regard to the SFT Regulation, the Council's Permanent Representatives Committee (COREPER) had agreed the Council's general approach on the SFT Regulation in November and had invited the Council to confirm its agreement, which the Council has now confirmed. As regards short selling, the Council has decided not to object to the Commission Delegated Regulation, which supplements the Short Selling Regulation, which will now enter into force, unless the European Parliament objects to it.
PRA advises firms to apply for LEI codes
The PRA published a letter setting out what it requires firms to do as a result of the EBA’s recommendation on the use of a legal entity identifier (LEI) for the Capital Requirements Regulation (CRR) supervisory reporting obligations. The LEI recommendation requires firms to obtain an LEI code(s) for the firm or group by 31 December 2014 at the latest. If a firm reports as a consolidated group, the LEI recommendation requires it to obtain LEI codes for all entities within the group on which information is

5. required under its CRR reporting obligations. This includes the relevant parent entity regardless of whether it is an institution or a holding company. In the letter, the PRA advises any firm that is unable to comply with the LEI recommendation to notify it by the end of this week.
BIS consulting on exceptions to ban on corporate directors in SME Bill
The Department for Business, Innovation & Skills has published a consultation paper seeking views on the extent to which the Secretary of State should make exceptions to the proposed ban on corporate directors, as set out in the Small Business, Enterprise and Employment Bill, currently before Parliament. The BIS considers that there is a strong case for allowing companies with shares admitted to trading on a regulated market to appoint corporate directors and it also believes that large private companies could be disadvantaged by a blanket prohibition. BIS does not propose to change the existing regime for LLPs, which permits the appointment of corporate members, as there is risk that imposing a prohibition may restrict future investment in LLPs, given the economic interest such members hold in an LLP. Comments should be received by 8 January 2015.
Cummings
Tel: + 44 20 7585 1406 Mob: + 44 7734 057 327 www.cummingslaw.com 5 December 2014
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