UK/EU Investment Management Update (June 2020)
EU and UK draft Free Trade Agreement
On 19 May 2020, the UK Government published a draft UK-EU Free Trade Agreement (the Draft Agreement), which forms the basis for discussions and negotiations with the EU on a finalised comprehensive free trade agreement and is intended as a response to the EU’s own draft new partnership treaty published on 18 March 2020. The Draft Agreement was confidential but has now been made available to the public and forms the core of a suite of documents published on 19 May 2020, intended to shape the relationship between the UK and the EU.
New ESMA Q&A
On 28 May 2020, ESMA updated its Investor Protection Q&A in relation to MiFID II.
The new Q&A 7 provides clarification on the application of the MiFID definition of “acceptable minor non-monetary benefits.” That term is not limited to the MiFID services of portfolio management and independent investment advice but applies equally to other MiFID investment or ancillary services.
On 28 May 2020, ESMA updated its Q&A in relation to EMIR.
The newly added Trade Repository (TR) Q&A 54 provides clarifications on reporting of over-the-counter derivatives by a financial counterparty (FC) on behalf of a nonfinancial counterparty below clearing threshold (NFC-) under EMIR Refit.
FCA – Market Watch 63 newsletter
On 27 May 2020, the FCA published the 63rd edition of its Market Watch newsletter. The newsletter sets out the FCA’s expectations for market conduct in the context of increased capital raising events and alternative working arrangements due to COVID-19.
Please see our Sidley Update “Market Conduct in an Era of Remote Working – UK Financial Conduct Authority Market Watch 63” on the above Market Watch newsletter.
New EU action plan and amendments to EU list of high-risk countries
On 7 May 2020, the European Commission published a six-point action plan (the Action Plan) that could fundamentally change how AML and counterterrorist financing (CTF) laws are implemented and enforced across the EU. On the same day the European Commission also adopted a new delegated regulation in relation to third countries that have strategic deficiencies in their AML/CTF regimes in order to align the EU list more closely with the Financial Action Task Force’s list of high-risk countries.
On 3 June 2020, ESMA published a consultation paper on guidelines on outsourcing to cloud service providers.
The proposed guidelines will apply to a wide range of financial institutions, including alternative investment fund managers (AIFMs) and the related depositaries, UCITS management companies and related depositaries, and MiFID investment management and other firms.
On 27 May 2020, the European Commission published a revised Commission Work Programme. The original Commission Work Programme, adopted on 29 January 2020, set out the major initiatives that the commission was pursuing for the year, such as the European Green Deal and the Digital Strategy, but had to be revised to account for disruptions to various initiatives and to incorporate the EU’s Recovery Plan, a reinforced EU budget plan intended to help repair the damage caused as a result of the COVID-19 pandemic.
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