U.K. – FCA MIFID II Exemptions

On 19 July, FCA issued guide on MIFID II ancillary activity exemption.

  • Guide to assist with submission of annual notification of ancillary activity exemption.
  • Firms to conduct assessment of activities as set out in RTS 20 to see if in Art 2(1)(j).
  • Need to register for Connect to have access to the FCA’s online exemption form page.
  • Ancillary notification application page shows any draft notifications and can start new.
  • Form requires submission of entity name, LEI or National ID if firm does not have one.
  • Once submitted firms will receive an email confirming receipt of application with ref.

France – AMF Guide for Asset Managers

On 18 July, AMF offered guidance for asset managers, UCITS

  • Covers guide to AMF’s expectations regarding compliance at asset manager firms.
  • Guide specifies how various controls within firm are to be operated to control risk.
  • Also addresses how SGPs manage UCITs or AIFs and provide investment services.
  • Updates June. 20 guidance on employees who are seconded within entity group.


  • Self-managed vehicles (UCITS, AIF, etc.) that manages its own portfolio.
  • Investors are reminded that that these legal entities should register with the AMF.
  • And comply with the relevant regulations in terms of reporting.
  • “Scope of the program of operations” presents a concise overview of the activities.
  • Performed by an asset management company; such as order transmission and advice.

E.U. AML Beneficial Ownership Update

Update to address High Risk Countries

On 11 July, the EC issued a letter on the AMLD assessment of high risk third countries.

  • Proposes four stage approach focusing on priority third countries first based on exposure.
  • First stage is develop methodology for assessment, international list to be added to by EC.


Previously reported, on 20 April, the EU Council adopted a position on AML directiveregulation.

Brief highlights of Beneficial Ownership

  • EU States to maintain central registers listing information on beneficial owners and trusts.
  • States may allow public access, can be subject to registration of person, payment of fee.
  • Make accessible without restriction to obliged entity, e.g on bank customer due diligence.
  • To access register, person must demonstrate they have legitimate interest e.g. journalist.
  • Access owner name, month and year of birth, nationality, country of residence, ownership.
  • Central register information on trusts is accessible only to authorities and obliged entities.

E.U. ESMA Proposes Guidelines for MiFID II Suitability

On 13 July, ESMA proposed guidelines on MiFID II suitability provisions.

  • Follows ESMA 2012 guidance on MiFID for suitability and compliance units.
  • Covers guidelines to enhance clarity and foster convergence in suitability requirements.
  • Key principles remain unchanged since MiFID but has strengthened certain obligations.

Suitability Requirements

  • Guidelines make reference to fact that robo-advisers do not reduce a firm’s responsibility.
  • That firms must provide a statement on suitability prior to the conclusion of transaction.
  • Further details on conduct rules for firms providing a periodic assessment of suitability.
  • Requires firms to take into account whether equivalent products might meet client needs.
  • And requires firms analyze costs and benefits of switching from an investment to another.
  • Must also consider clients’ risk tolerances and extends suitability to structured deposits.


  • Comments are due by 13 October 2017.

Spain – Short Selling Ban in Liberbank S.A. Shares

On 12 July, the CNMV extended its short selling ban in shares of Liberbank S.A.

  • Extension remains for two (2) months
  • Enters into force on 12 July 2017 at 23:59 CET and applies until Sep 12.
  • Ban applies to net short positions of Liberbank SA shares under the Short Selling Reg.
  • The measure does not apply to market-making activities, hedging or trading in indices.
  • Short selling measure applies to any person, irrespective of their country of residence.
  • ISIN: ES0168675090
  • CNMV Statement

ESMA Opinion

  • ESMA opinion that circumstances of Liberbank constitute adverse scenario for Spain.

FCA Statement

  • On 13 July, the FCA issued statement supporting CNMV decision to extend short selling ban.


E.U. ESMA Issues Final Standards for Derivatives Data

On 10 July, ESMA issued rules on the aggregation of derivatives data.

  • Follows Jun. 2012, ESMA new rules for derivatives, CCPs and repositories.
  • RTS defines operational standards for aggregation and comparison of position data.
  • Is to ensure that market activity in derivatives traded on and off market identified.

Derivative Data

  • Rules set the frequency and timeliness of publication and how data is aggregated.
  • And details of aggregation for purposes of benchmarks’, commodities thresholds.
  • Adds clarification on publication of data by TRs on outstanding volumes of trades.
  • To avoid double counting across different trade repositories reporting under EMIR.
  • Provides ETDs reported only in cleared forms, as normally cleared in short time.
  • Trade repository is to publish aggregate position data on website on weekly basis.
  • Data includes CFDs, forward rate agreements, futures, forwards and spreadbets.
  • Sets CO, credit, currency, equity, interest rate and other as categories of derivative.
  • Venue of location is to specify if trade was off market and whether venue in the EU.
  • Also sets provisions for the reporting of LEIs depending on the venue of execution.


  • Final RTS is sent to EC, which has three months to decide whether to endorse them.

Hong Kong and France – Mutual Recognition of Funds

On 10 July, the SFC  and the AMF have signed a Memorandum of Understanding  on Hong Kong-France Mutual Recognition of Funds (MRF).

The MOU will allow eligible Hong Kong public funds and French UCITS funds to be distributed to retail investors in each other’s market through a streamlined authorization process.

The MoU is the first agreement between Hong Kong and a member of the European Union which establishes the regulatory framework for distribution of eligible Hong Kong and French funds, which currently include general equity funds, bond funds and mixed funds.

It also stipulates a mechanism for regular dialogue and regulatory cooperation thus enabling the SFC and the AMF to fulfil their respective supervisory and regulatory mandates.

Further details can be found in the issued Circular and in the FAQs.


E.U. ESMA Short Selling Advice

On 7 July, ESMA proposed technical advice on short selling regulation.

  • Covers advice on exemption from short selling restriction for market making activities.
  • Notes the difference between MiFID market maker and SSR market making activities.
  • Asks market participants on their views on the absence of alignment of the definitions.
  • Of view that membership requirement should be better clarified on Art 2(1)(k) of SSR.
  • Asks if membership requirement should not apply to pure OTC instruments and reasons.
  • Scope of financial instruments eligible for market making exemption to be re-analyzed.
  • Considers whether market maker should be able to notify list of instruments by index.


  • Comments are due by 4 September 2017.

France – AMF MiFID II Trade Transparency

On 30 June, AMF proposed rules on trade transparency for MiFID II.

  • Covers application of pre- and post-trade transparency mechanisms under MiFID II.
  • Apply to operators of trading venues (MTFs, OTFs etc) and to systemic internalizers.
  • Investment firms trading OTC are subject to post-trade transparency obligations only.
  • Seeks comment on how it should apply waivers for equity and non-equity instruments.

Waiver Proposals

  • Proposes keeping system introduced under MiFID ie to allow options under MiFIR.
  • And to grant waivers requested on a case-by-case basis through AMF rule approval.
  • Plans to take same approach for publication deferrals as with pre-trade transparency.
  • And to offer all the options provided under MiFID for post-trade OTC transparency.


  • Comments are due by 31 August 2017.