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CACEIS European Regulatory Watch Newsletter

CACEIS European Regulatory Watch Newsletter

5

2014 November No.5

EUROPE AIFMD - Reporting IT technical guidance (revision 4)

GERMANY CRA III- Regulation transposed in Germany

AIFMD - ESMA Q&A update on reporting CSDR – European Commission issues Q&A

IRELAND Irish Collective Asset Management Vehicle (“ICAV”) introduction Publication by Irish Revenue Commissioners of finalized guidance notes on the implementation of FATCA SWITZERLAND Potential impact of the proposed new regulation Financial Institutions Act (“FinIA”) for “independent” investment managers FRANCE Modification of Books II and V of the AMF General Regulation Reporting obligation to the AMF through implementation of the AIFMD Accounting plan of open-ended collective investment undertakings

EMIR- Consultation of ESMA on draft standards for the clearing of foreign-exchange non deliverable forwards EMIR- Definition by ESMA of products, counterparties and starting dates for the clearing of interest rate swaps EuSEF & EuVECA – Consultation of ESMA on implementing measures and open hearing on 10 November 2014 MiFID – Consultation of ESMA on the definition of financial instruments MiFID - Publication of ESMA of Remuneration Guidelines compliance table LUXEMBOURG Publication by ALFI of the Guidelines on AIFMD reporting Publication by ALFI of Q&A on AIFMD reporting UCITS- Implementation by CSSF of the ESMA revised guidelines on ETFs and other UCITS issues

THE NETHERLANDS EMIR-reporting obligation upon a mandate

...

? W hat’s in there

?

W hat’s next

B ackground

AIFMD - ESMA Q&A update on reporting Background The purpose of the ESMA Q&A is to promote com- mon supervisory approach and practices in order to ensure that the AIFMD is applied in a uniform man- ner across the EU. The previous version of the ESMA Q&A was issued on 18 July 2014. What’s in there? On 30 September 2014, ESMA updated its AIFMD Q&A (ESMA/2014/1194) with regard to reporting to national competent authorities and delegation, AS FOLLOWS The updated AIFMD Q&A issued by ESMA is AVAILABLE HERE. What’s next? The AIFMD Q&A is updated by ESMA from time to time. CSDR - European Commission issues Q&A Background Adopted on 23 July 2014 and published in the OJEU on 28 August 2014, Regulation (EU) No 909/2014 ("CSDR") lays down requirements for the settle- ment of financial instruments and the organiza- tion and conduct of central securities depositories ("CSDs"). The CSDR is AVAILABLE HERE . The CSDR entered into force on 17 September 2014. What’s in there? On 6 October 2014, the Commission issued a Q&A on various CSDR topics (the "Q&A"). The 24 ques- tions and answers concern more particularly (i) the timing of the CSDR implementation, (ii) the scope of

EUROPE AIFMD- Reporting IT technical guidance (revision 4) Background On 25 March 2014, ESMA published revised IT technical guidance [ESMA/2013/1358] and XML documents [ESMA/2013/1361] regarding AIFMD reporting. More specifically, the IT technical guidance (2013/1358) contained the following set of documents: « IT technical guidance including the description of changes performed on the technical guidance and/or XSD documents in sheet "change history"; « Excel version of Annex III – "Table of geographical areas"; « Previous version of XSD documents (Version 1.1). What’s in there? On 23 September 2014, ESMA published an up- date of the IT technical guidance regarding AIFMD reporting. This fourth revision contains modifications of the IT technical guidance to take into account the last published version of the Questions and Answers (Q&A) on the application of the AIFMD (2014/868) as well as some clarifications and correction of in- consistencies with XSD documents. Revision 4 of the AIFMD reporting IT technical guid- ance is AVAILABLE HERE . The IT technical guidance regarding AIFMD re- porting [ESMA/2013/1358] and the XML doc- uments [ESMA/2013/1361] may be subject to further revision. Questions regarding technical support may be sent to INFO.IT.AIFMD@ESMA.EUROPA.EU . Each AIFM should contact directly its national com- petent authorities regarding how the filling of the XML reports will be handled at national level. « XML samples for AIFM and AIF reports;

the CSDR and (iii) the position of third country CSDs. The key clarifications provided by the Q&A are the following: TIMING OF IMPLEMENTATION The CSDR entered in force on 17 September 2014. Its provisions are directly applicable in the Member States. Technical standards to be provided by ESMA and EBA by 18 June 2015 should not enter into force before Q4 2015. The dematerialization requirements for transferable securities took effect on 17 September 2014 in re- spect of securities that are the object of a transac- tion taking place on a regulated traded venue and to securities that are transferred following a financial collateral arrangement. Otherwise, this requirement will take effect as from: « 1 January 2023 for transferable securities issued after that date; « 1 January 2025 for all transferable securities. Whereas the general requirement to settle trans- actions in transferable securities, money-market instruments, units in collective investment under- takings and emission allowances apply as from 17 September 2014, the T+2 requirement applying to transactions in transferable securities executed on trading venues applies as from 1 January 2015 (un- less they are settled in a CSD that outsources its activities to a public entity). CSDs will need to apply for authorization within 6 months following the entry into force of the relevant technical standards. Such authorization will trigger compliance with the provisions of Title III ("Central Securities Depositories") and IV ("Provision of bank- ing-type ancillary services for CSD participants") of the CSDR. Member States must put in place national rules lay- ing down sanctions under the CSDR by 18 Septem- ber 2016 at the latest.

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SCOPE OF THE CSDR As a rule, the CSDR applies to the settlement of all financial instruments unless otherwise stated below: « The dematerialization requirements only apply to transferable securities (including transferable se- curities issued by third-country issuers); « The T+2 settlement requirement applies to trans- ferable securities, money-market instruments, units in collective investment undertakings and emission allowances (to which the settlement discipline measures referred to in Article 7(2) to (9) apply). THIRD-COUNTRY CSDS Third-country CSDs may provide services in the EU pursuant to Article 25(2). A CSD is required to apply for recognition under the CSDR where it intends to provide certain core CSD services and services in the EU through a branch set up in a Member State. All other services are not subject to recognition. Where required, the recognition application has to be made within 6 months of the entry into force of the relevant technical standards or the Commission equivalence decision. Before recognition, third-country CSDs providing services that require recognition under the CSDR remain subject to national regimes. The Q&A is AVAILABLE HERE. What’s next? The Q&A will be updated from time to time. Questions related to the regulatory and implement- ing technical standards will be dealt with only after the adoption of those standards by the European Commission. EMIR- Consultation of ESMA on draft standards for the clearing of foreign- exchange non deliverable forwards Background The Regulation (EU) No 648/2012 on OTC deriva- tives, central counterparties and trade repositories (“EMIR”) was published in the OJEU on 27 July 2012 and entered into force on 16 August 2012. Article 5(2) of EMIR ("Clearing obligation proce- dure") requires ESMA to develop and submit to the European Commission for endorsement draft regu-

latory technical standards (RTS) after consultation of the relevant stakeholders. ESMA already published two discussion papers in July 2013: a first consultation paper on the clear- ing obligation on interest rate classes and a second consultation paper on the clearing obligation on credit classes. ESMA also published a final report on the clearing obligation on interest rate classes. What’s in there? On 1 October 2014, ESMA published its consultation paper ESMA/2014/1185 "Clearing Obligation under EMIR (no.3)" for the clearing of foreign-exchange non-deliverable forwards OTC derivatives ("the Consultation Paper"). The Consultation Paper proposes a clearing obli- gation procedure. It further proposies criteria so as to ensure that central counterparties will be able to determine which are the classes of OTC derivatives will be subject to the clearing obligation. The Consultation Paper is AVAILABLE HERE . What’s next? The consultation period runs until 6 November 2014. In addition, ESMA will consult the ESRB and, where relevant, the competent third-country au- thorities. At the end of the consultation process, ESMA shall submit the draft regulatory technical standards to the European Commission for endorsement. EMIR- Definition by ESMA of products, counterparties and starting dates for the clearing of interest rate swaps Background The EMIR Regulation was published in the OJEU on 27 July 2012 and entered into force on 16 August 2012. Article 5(2) of EMIR ("Clearing obligation proce- dure") requires ESMA to develop and submit to the Commission for endorsement draft regulatory technical standards (RTS), after consultation of the relevant stakeholders. A discussion paper "The Clearing Obligation under EMIR" (ESMA/2013/925) was published on 12 July 2013 ". On 11 July 2013, ESMA published a first

RTS version in its consultation paper "Clearing Obli- gation under EMIR (no.2)" (ESMA/2014/800). What’s in there? On 1 October 2014, ESMA issued its final draft regu- latory technical standards (RTS) for the central clear- ing of Interest Rate Swaps (IRS) (ESMA/2014/1184). The RTS include a list of interest rate OTC deriv- atives classes subject to the clearing obligation. It includes: The RTS further include a list of criteria pertaining to the application of the clearing obligation as well as to the related date as from which the clearing obligation will take effect. The RTS for the central clearing of Interest Rate Swaps are AVAILABLE HERE. What’s next? ESMA submitted on 1 October 2014 its final draft IRS RTS to the European Commission, which has now up to three months to endorse them. The RTS will enter into force and become effective 20 days after their publication in the Official Journal of the European Union. « Basis swaps; « Fixed-to-float swaps; « Forward rate agreements; and « Overnight index swaps.

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EuSEF & EuVECA– Consultation of ESMA on implementing measures and open hearing on 10 November 2014 Background On 26 September 2014, ESMA issued a consulta- tion paper addressed to social entrepreneurs, im- pact investors, European Social Entrepreneurship Fund ("EuSEF") and European Venture Capital Fund ("EuVECA") managers, impact fund managers, business angels, venture capitalists and other rele- vant stakeholders and their associations in the area of social entrepreneurship and venture capital in the European Union. What’s in there? The consultation paper is divided in five parts:  Part I deals with the advice on the types of goods and services, methods of production for goods and services and financial support embodying a social objective;  Parts II and III deal with the advice on the con- flicts of interest of EuSEF and EuVECA managers, respectively;  Part IV deals with the advice on the measure- ment methods for the social impact;  Part V deals with the advice on the informa- tion that EuSEF managers have to provide to investors.

MiFID – Consultation of ESMA on the definition of financial instruments Background ESMA raised in a letter sent to the Commission dated 14 February 2014 that the non-harmonized classification of financial instruments as derivatives or derivative contracts might prevent a consistent application of EMIR (Regulation (EU) No 648/2012). On 26 February, the Commission invited ESMA to consider issuing guidelines on the application of the definitions of financial instruments set forth under points 6 and 7 of Annex 1, Section C of MiFID (here- after "C6" and "C7"). As a reminder, C6 includes: options, futures, swaps and any other derivative contract relating to com- modities that can be physically settled provided that they are traded on a regulated market and/or an MTF. C7 includes options, futures, swaps, forwards and any other derivative contracts relating to commod- ities that can be physically settled not otherwise mentioned in C.6 and not being for commercial purposes, which have the characteristics of oth- er derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through recognized clearing houses or are subject to regular margin calls. What’s in there? On 29 September 2014, ESMA published a consul- tation paper on future guidelines clarifying the defi- nition of derivatives as financial instruments under MiFID (the "CONSULTATION PAPER" ). In the Consultation Paper, ESMA proposes guidance on the specification of C6 and C7. In particular, ESMA follows the approach that C6 in- cludes commodity derivative contracts that "must" and "can" be physically traded. Furthermore, ESMA considers that the definition of C6 and C7 form two distinct categories, as C7 applies to commodity de- rivatives "that can be physically settled not other- wise mentioned in “C6", meaning that they are not traded on a regulated market or an MTF. The full list of questions raised by ESMA is available in Annex I of the Consultation Paper. The Consultation Paper is AVAILABLE HERE . What’s next? Comments should be raised by 5 January 2015.

Each part is divided in five sections:  The first sets out the applicable legal frame- work;  The second describes the mandate and indi- cations from the European Commission;  The third explains the proposed policy ap- proach;  The fourth sets out the proposed advice to the European Commission;  The fifth poses a number of questions to the participants in the consultation. The consultation paper is AVAILABLE HERE . What’s next? All received contributions will be published fol- lowing the close of the consultation, unless oth- erwise requested by the contributor. ESMA invites comments on all matters in this consultation pa- per and in particular on the specific questions summarized in Annex 1. On 10 November 2014, ESMA will hold an open hearing on the issues raised in the consultation paper and the relevant advice to be provided to the European Commission. ESMA is seeking input from representatives of the EuSEF and impact investment funds sectors, impact fund managers, impact investors, social enterprises, service providers and other stake- holders. Registrations for the open hearing can be made online. THE LINK IS AVAILABLE HERE . The hearing will be held on Monday 10 November 2014 from 14.00 to 18.00 CET and is open to all. ESMA is expected to deliver its advice to the Eu- ropean Commission by the end of April 2015.

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MiFID Publication of ESMA of Remuneration Guidelines compliance table Background

On 11 June 2013, ESMA published the guidelines on remuneration policies and practices (MiFID) (ESMA/2013/606) (the "Guidelines"). The purpose of these Guidelines is to ensure the consistent and improved implementation of the existing MiFID con- flicts of interest and conduct of business require- ments in the area of remuneration. These Guidelines apply to investment firms includ- ing credit institutions which provide investment ser- vices, UCITS Management Companies and external AIFMs providing discretionary portfolio manage- ment and ancillary/non-core services. The aim of these Guidelines is to implement a remu- neration policy and practices which avoid conflicts of interest between collaborators and clients and re- inforce clients' protection. Moreover, the remunera- tion policy should also ensure compliance with the companies are behaviors and business rules. What’s in there? On 7 October 2014, ESMA published a table sum- marizing the compliance status to the Guidelines of the competent authorities of the European Member States, European territories or EEA EFTA States. It results therefrom that all competent authorities of the Member States comply with these Guide- lines, except the German authority Bundesanstalt für Finanzdienstleistungsaufsicht ("BaFin"). The non-compliance of the BaFin is due to its decision to allow to derogate from the remuneration part of the Guidelines when the parties have agreed on a remuneration in a collective labour agreement. In Luxembourg, these ESMA Guidelines have been transposed by CSSF Circular 14/585.

LUXEMBOURG Publication by ALFI of the Guidelines on AIFMD reporting Background The Directive on Alternative Investment Fund Man- agers ("AIFMD") was implemented in Luxembourg by the Law of 12 July 2013 (the "AIFM Law"). Chapter 4 of the AIFM Law establishes the transpar- ency requirements for AIFMs. Article 20 of the AIFM Law especially deals with annual report require- ments and imposes to each AIFM to make available to the CSSF an annual report for each financial year. This annual report shall be made available to inves- tors upon request. Article 21 of the AIFM Law details the information that needs to be disclosed to investors. What’s in there? On 3 October 2014, the Association of the Luxem- bourg Fund Industry ("ALFI") published Guidelines on Reporting to investors and annual reports under the AIFMD. The document was prepared by ALFI's working group for reporting under the AIFMD. The working group comprises representatives of asset manag- ers, management companies, securities service firms, audit firms, law firms and document and in- formation management firms. The purpose of the

document is to provide guidance in preparation of the Luxembourg annual report of regulated AIFs (mainly UCI Part II and SIFs) under the AIFMD. The Guidelines provide guidance on two different subjects: « The preparation of Luxembourg annual report of regulated AIFs under AIFMD; « The preparation of the periodic report to investors pursuant to Article 21 of AIFM Law. However, clarifications given in the Guidelines do not address the information to be included in the prospectus.

The Guidelines cover the following topics:

« General aspects, valuation policies and NAV dis- closure; « Balance sheet and profit and loss accounts;

« Report of activities; Material changes; «

Remuneration;

«

Liquidity

«

« Risk related disclosure;

Leverage; and

«

« Private Equity disclosure.

For each topic, ALFI provided its guidance as fol- lows:  Reminder of the Article in the AIFM Law;  Reminder of the corresponding Articles in the AIFMD-CDR;  ALFI Guidance on the basis, where applicable, of the two most common accounting frameworks used in Luxembourg: Luxembourg GAAP and IFRS.

The Guidelines compliance table IS AVAILABLE HERE.

The ALFI Guidance on AIFMD reporting IS AVAILA- BLE HERE.

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Publication by ALFI of Q&A on AIFMD reporting Background The Directive on Alternative Investment Fund Man- agers ("AIFMD") was implemented in Luxembourg by the Law of 12 July 2013 (the "AIFM Law"). Chapter 4 of the AIFM Law establishes the transpar- ency requirements for AIFMs. Article 22 of the AIFM Law especially sets forth the reporting obligation of AIFMs to the CSSF. What’s in there? On 3 October 2014, the Association of the Luxem- bourg Fund Industry ("ALFI") published Questions and Answers ("Q&A") on Reporting to investors and annual reports under the Directive on Alternative Investment Fund Managers ("AIFMD"). The Q&A only pertains to the CSSF reporting of AIFMs under Article 22. The document was prepared by ALFI's working group for reporting under the AIFMD. The working group comprises representatives of asset manag- ers, management companies, securities service firms, audit firms, law firms, and document and information management firms. The document contains the working group's answers to questions about AIFMD reporting. However, it is not meant to be an industry standard or a best practice guide, as it represents the views of a group of market par- ticipants. The Q&A has not been validated by any regulator. The Q&A provides details on how the information identified in the reporting template (Annex IV of the AIFMD-CDR) shall be submitted to the CSSF. In particular, the Appendix of the Q&A provides guid- ance on how the total assets under management shall be calculated. The ALFI Q&A on AIFMD reporting IS AVAILABLE HERE. What’s next? The Q&A will be updated from time to time.

UCITS- Implementation by CSSF of the ESMA revised guidelines on ETFs and other UCITS issues Background On 18 December 2012, ESMA published its guidelines on ETFs and other UCITS issues (ESMA/2012/832) (the "Guidelines"). The Guide- lines applied to UCITS management companies and self-managed SICAV. On 24 March 2014, ESMA published a revised version of the Guidelines which was translat- ed in all European languages on 1 August 2014 (ESMA/2014/937). As a reminder, the update introduced a new sub- paragraph under Paragraph 43(e) laying down the derogative rules under which a UCITS may be fully collateralized in different transferable securities and money market instruments issued or guaranteed by a Member State, one or more of its local authori- ties, a third country, or a public international body to which one or more Member States belong. In this case, the revised Guidelines state that "such a UCITS should receive securities from at least six different issues, but securities from any single is- sue should not account for more than 30% of the UCITS’ net asset value. UCITS that intend to be fully collateralized in securities issued or guaranteed by a Member States should disclose this fact in the prospectus of the UCITS. UCITS should also identify the Member States, local authorities or public inter- national bodies issuing or guaranteeing securities which they are able to accept as collateral for more than 20% of their net asset value." Furthermore, under the provision of the new para- graph 48 of the revised Guidelines, in the context of OTC financial derivative transactions and efficient portfolio management techniques, the UCITS annual report must include information on:

« The name of an issuer from whom the UCITS re- ceived a collateral which exceeded 20% of the NAV; « Whether the UCITS has been fully collateralised in securities issued or guaranteed by a Member State, one or more of its local authorities, a third country, or a public international body to which one or more Member States belong. What’s in there? Without any departure from the above ESMA rules, the CSSF issued on 30 September 2014 the Circular 14/592 (the "Circular") implementing the updated Guidelines in Luxembourg. The Circular IS AVAILABLE HERE . What’s next? The Circular entered into force on 1 October 2014 and replaces CSSF Circular 13/559. However, existing structures benefit from a 12-month grandfathering period for full compli- ance. Thus, existing structures must comply with the Guidelines no later than on 1 October 2015. GERMANY CRA III – Regulation transposed in Germany Background The Regulation (EU) No. 462/2013 (CRA III) amend- ing Regulation (EC) No. 1060/2009 on Credit Rating Agencies (CRAs) came and the Directive 2013/14/ EU on the same matter have been adopted by the European Parliament and Council on May 21, 2013. The Directive has to be transposed into national law until December 21, 2014. Therefore, on June 6, 2014 the German government published the draft of a transposition law (CRA-AusführungsG). What’s in there? The Regulation’s intention is to reduce the market participants’ dependency on ratings, to improve the quality and transparency of ratings and the inde- pendence between the CRAs and the companies being rated, as well as to increase competition be- tween CRAs.

The Directive contains provisions to prevent UCITS and AIFMs from over-reliance on ratings when as-

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What’s next? The ICAV bill was published by the Department of Finance on 29 July 2014. The bill is expected to be enacted towards the end of 2014 once the legis- lative review process in both houses of the Irish parliament has been completed. However, the pro- visions of the ICAV Act will not take effect until the relevant minister signs the necessary commence- ment order. FATCA - Publication by Irish Revenue Commissioners of finalized guidance notes on the implementation of FATCA Background The Irish Revenue Commissioners (“Revenue”) published on the 1 st October 2014 their finalized Guidance Notes on the implementation of FATCA (“Guidance Notes”). The updated Guidance Notes replace the previous draft Guidance Notes issued in January 2014, and reflect a number of suggestions and clarifications requested by various industry groups. Revenue have indicated that the Guidance Notes are intended to be a living document and will be updated on occasions to reflect practical issues that may arise over time. What’s in there? The revised Guidance Notes clarify that Collective Investment Schemes can choose to register for a Global Intermediary Identification Number (“GIIN”) at either umbrella or sub-fund level.Where registra- tion is done at the umbrella level, reporting should be done at that level.

sessing the creditworthiness of the fund’s assets. Generally, an automated recourse to ratings from CRAs for regulatory purposes shall be prevented. This transposition adapts the relevant provisions of the CRA III in the German Securities Trading Act (Wertpapierhandelsgesetz (WpHG), in the German Banking Act (Kreditwesengesetz (KWG), in the Ger- man Investment Code (Kapitalanlagegesetzbuch (KAGB), in the German Law on Supervision of In- surance Undertakings (Versicherungsaufsichts- gesetz (VAG) and in the German Stock Exchange Act (Börsengesetz). According to the new §29 Abs. 2a KAGB, the fund is not allowed to rely solely on ratings provided by CRAs when evaluating counterparty risks of se- curities or other financial instruments held for the fund. The regulatory authorities have to supervise the alternative rating procedures implemented by UCITS and AIFMs. Breaches of the UCITS or AIFMs obligations will be sanctioned. What’s next? The draft is under discussion with market partici- pants. A final version is expected soon in order to be adopted in time until December 21, 2014. IRELAND Irish Collective Asset Management Vehicle (“ICAV”) introduction Background On 29 July 2014, the Irish government made public the bill introducing the ICAV. Ireland’s new bespoke corporate fund vehicle offers enhanced distribu- tion and a simplified compliance model. The ICAV is being introduced under new legislation which is tailor-made for investment funds resulting in a more

efficient and effective fund structure. The new ICAV structure will run parallel to, rather than replacing, existing fund structures such as unit trusts, invest- ment limited partnerships and variable capital com- panies. What’s in there? The main benefits of the ICAV are its flexibility, its “check the box” feature for US tax purposes and its simplified compliance. The fund will under US tax rules be treated as a transparent or flow-through entity for US federal income tax purposes. This means that any US investor is placed in the same tax position as if they had invested directly in the underlying investments of the ICAV. This status will make the ICAV particularly attractive for US inves- tors seeking tax efficient returns from a regulated corporate fund vehicle. A stream-lined incorporation and authorization pro- cess, as both steps will be carried out simultane- ously by the Central Bank of Ireland (“CBI”) rather than registration first with the Companies Registra- tion Office (“CRO”) followed by CBI authorization. The ICAV will allow a streamlined compliance pro- cedure: currently both the CRO and the CBI need to be informed of material changes including changes to directors; the ICAV will only need to inform the CBI of such company secretarial changes. Overseas investment companies will be able to convert to an ICAV under the streamlined re-dom- iciliation migration one-step process introduced in 2009, rather than being required to migrate and then convert. As a tailor made vehicle designed to cater for the needs of investment funds, the ICAV will be the vehicle of choice for future Irish fund launches and replace the variable capital company over time. Before embarking down the conversion road, funds will have to embark on a cost benefit analysis and consider the tax implications. The Funds’ exist- ing legal document will have to be reviewed and amended accordingly.

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What’s in there? In Switzerland, IIM who do not qualify as banks or assets managers of Swiss or foreign collective investment scheme according to the Collective Investment Schemes Act (“CISA”) are not subject to licensing requirements. In accordance with the proposed FinIA, an IIM is a person who, based on a mandate and in the name and the account of cli- ents, professionally manages assets or has access to clients’ assets in an another way. The proposed FinIA provides for a general obligation for those IIM to obtain a licence and establishes a prudential supervision regime for such managers. Moreover, in the view of obtaining a licence, the IIM have to fulfil extensive requirements associated with their activities. The granting of the authoriza- tion for an IIM will be subject to the obligation of having for example an adequate organisation in place, an internal risk control system and sufficient financial guarantees or purchase professional in- demnity insurance. It shall be noted moreover that the transitional pro- visions provide for an exception to the licensing ob- ligation that applies to existing IIM with at least 15 years of experience as asset managers (grandfa- thering clause) and under the condition that they do not accept any new client.This “the minimis” clause is probably not of great functional importance since most of the IIM would not accept to limit their busi- ness only to existing clients. This crucial change will mark the end of the Swiss peculiarity in the financial industry in the asset management field. Finally, if the FinIA is implemented as currently pro- posed, IIM will be facing substantial costs in order to comply with the FinIA requirements. In particular, for those asset managers with a little structure (fre- quently just one or several persons at a given firm) this involves additional time and massive expenses that will be difficult to support. This will most proba- bly impact the overall market, with a part of the IIM being forced to leave the business or the merger of the IIM. The Swiss Federal Council justifies its pro- posal for an increased regulation of asset managers by offering a better client protection, as well as en- suring an equal treatment of financial service pro- viders (level playing field). In addition, the proposed draft of the LEFin will allow market access of Swiss financial services providers to EU, as the FinIA will permit them to comply with MIFID II.

The financial institution will submit their FATCA re- turns on or before the 30 th June each year through the Revenue online ROS portal. In the event that there are minor errors in the return, the Internal Revenue Service will contact Revenue who will in turn contact the relevant financial institution to ob- tain the required information. Clarification is provided on the role of the Respon- sible Officer noting that, in a Model 1 Jurisdiction such as Ireland, the US concept of Responsible Of- ficer is not invoked. Irish financial institutions do not need to appoint a Responsible Officer when regis- tering for a GIIN and instead are required to appoint a point of contact only. A reporting financial institution can rely on third party service providers to fulfil its obligations under FATCA. However, the reporting financial institution is ultimately responsible for ensuring that they are compliant with the applicable regulations. What’s next? Financial Institutions will have to ensure that all rel- evant due diligence and reporting requirements are met in preparation for the first reporting date of 30 June 2015. All financial institutions should ensure that they have registered for a GIIN before the 1 st January 2015. SWITZERLAND Potential impact of the proposed new regulation: Financial Institutions

The FinIA’s consultation period ended on October 17, 2014. FRANCE Modification of

Books II and V of the AMF General Regulation Background

Law 2013-672 of 26 July 2013, regarding Sepa- ration and Regulation of the Banking Activities in- troduced into the Monetary and Financial Code the Article L.621-8-4, which specifies that “the AMF can be communicated, by the people or the entities mentioned in II of Article L.621-9, any document or information, whatever the support is, useful for the exercise of its monitoring and surveillance mis- sion”. The French Financial Markets Authority (“the AMF”) adapted accordingly its General Regulation. What’s in there? On 23 September 2014 has been published in the Official Journal of the French Republic (“the JORF”) the Ordinance of 15 September 2014 which approves the amendments made to the AMF General Regulation concerning the transmission to AMF by management companies of data relative to the composition of UCITS and AIFs portfolios they manage. The AMF, after consultation with the Banque de France, said this provision will not add any extra constraint on management companies. Submission to the Banque de France by management compa- nies of portfolios data for the purpose of monetary statistics will allow the management companies to consider as fulfilled their obligation of portfolio transmission as required by new Articles 314-98 and 319-26 of the AMF General Regulation. These provisions came into force on 6 October 2014.

Act (“FinIA”) for “independent”

investment managers. Background

THE ORDINANCE OF 15 SEPTEMBER 2014 IS AVAILABLE HERE.

As mentioned in Scanning N°4 (October 2014), the proposed FinIA represents a fundamental and pro- found set of reforms to the Swiss financial centre. One of the most significant change in this new draft law concerns “independent” investment managers (“IIM”). Indeed, the foreseen FinIA expects all asset managers to be subject to prudential supervision.

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Reporting obligation to the AMF through implementation of the AIFMD Background ESMA enacted guidelines on reporting obligations, as requested by Article 3 §3 D and by Article 24§ 1, 2 and 4 of the AIFM Directive. These guidelines intend to ensure, within the European Union, a common, uniform and consistent application of the reporting obligation towards the regulators. What’s in there? The AMF published on 24 September 2014 its 2014- 09 Position regarding modalities of implementation of the reporting obligation under the AIFM Directive. In this position, the AMF applies ESMA’s guidelines on reporting obligation under the AIFM Directive. It specifies the information that the portfolio man- agement companies (when managing an AIF) and self-directed AIFs under French Law must report to the AMF, the timing under which they must submit this declaration, as well as the procedures when go- ing from one reporting obligation to another. THE AMF 2014-09 POSITION IS AVAILABLE HERE Accounting plan of open-ended collective investment undertakings Background Law 2012-1559 of 31 December 2012 regarding the creation of the Public Bank of Investment author- ized the French Government to transpose the AIFM Directive through an Ordinance. Transposition into French Law took place on 25 July 2013. The AIFM Directive aims at creating a harmonized frame for the AIFs in Europe, while strengthening protection of investors and of savers. The main modifications concern on one hand a sim- plification of the range of products proposed today by the French managers and, on the other hand, the pursuit of the differentiation between funds falling within the scope of the 2009/65/CE Directive (Direc- tive UCITS IV) and funds falling within the scope of the AIFM Directive.

What’s in there? On 15 October 2014 has been published in the JORF the Ordinance of 8 September 2014, approving the 2014-1 Regulation of 14 January 2014 concerning the accounting system of open-ended collective in- vestment undertakings. This Regulation focuses only on mutual funds (UCITS) and open-ended alternative investment funds. It integrates new classifications issued from the transposition of the AIFMD in the Monetary and Financial Code but does not change existing ac- counting principles or methods of assets valuation and liabilities. This Ordinance became effective on 16 October 2014. THE ORDINANCE OF SEPTEMBER 8TH 014 APPROVING 2014-1 REGULATION IS AVAILABLE HERE. THE NETHERLANDS EMIR-reporting obligation upon a mandate Background This publication from the Dutch Authority for the Financial Markets (“AFM”) gives insight about who should report EMIR transactions when one party is only acting on the account of a client by executing the order under a mandate. In this case there are two (or more) parties involved with the same derivative transaction. What’s in there? The guidance, issued on 5 September 2014 by the AFM in consultation with DNB and the working group Dutch Advisory Committee Securities Industry (DAC- SI) gives a clear view on the question how far the EMIR-reporting obligation goes in situations where Party A does not enter into a derivative construction but bears the risks because of a mandate granted to party B. The publication was made because Europe- an law is not yet clear on this point. The AFM’s point of view is that all parties qualified as Eligible Counterparty or Professional) shall have to report all derivatives that they create upon a man- date (party B) or equal legal structures with a party (party B) that has a similar qualification under MiFID. THE GUIDANCE FROM THE AFM IS AVAILABLE ON THE FOLLOWING LINK

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Scanning This publication is produced by Legal and Compliance teams of CACEIS with the kind support of Communication teams and Group Business Development Support teams.

Editors Gaëlle Kerboeuf, Group General Counsel @ Marie-Andrée Bonnet, Compliance and Regulatory Watch Manager (France) @ Permanent Editorial Committee Gaëlle Kerboeuf, Group General Counsel Marie-Andrée Bonnet, Compliance and Regulatory Watch Manager (France) Chantal Slim, Head of Legal (CACEIS Bank France) Eliane Meziani-Landez, Head of Fund Structuring (France) Emilie Zaracki (Legal Officer) Ana Vazquez, Head of Fund Structuring and Domicile (Luxembourg) Véronique Bastin, Head of Compliance (Luxembourg) Stefan Ullrich, Head of Legal (Germany) Costanza Bucci, Legal and Compliance Manager (Italy) Mireille Mol, Legal and Compliance Manager (Netherlands) Laura Guzzi, Legal Manager (Belgium) Helen Martin, Head of Legal (Ireland) Sarah Perrier, Head of Legal and Compliance (Switzerland) Philippe Naudé, Marketing and Communication Specialist (France) Arianna Arzeni, Head of Group Business Development Support

Design Sylvie Revest, CACEIS, Communications

Photos credit Yves Maisonneuve, Yves Collinet, CACEIS, Fotolia

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