SCANNING 3

EMIR - ESMA Q&A update Background The Q&A mechanism is a practical convergence tool used to promote common supervisory ap- proaches and practices under Article 29 (2) of Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Author- ity (European Securities and Markets Authority - ESMA), amending Decision no. 716/2009/EC and repealing Commission Decision 2009/77/EC Reg- ulation, 15.12.2010, L331/84. What’s in there? On 23 June and 10 July 2014, ESMA published up- dated versions of the Q&As on the Implementation of Regulation (EU) no. 648/2012 on OTC deriva- tives, central counterparties and trade repositories (EMIR). It provides responses to questions from the general public, market participants and competent authorities in relation to the practical application of EMIR. The updated version of 23 June 2014 includes amendments and modifications of the sections regarding the reporting requirements under EMIR: « Reporting of the collateralisation and the collat- eral, including additional details regarding the valuation of the collateral, the forms of collateral to be reported, the currency for multicurrency collateral portfolios and the approach for collat- eral pools; « Reporting of valuation, including additional de- tails regarding mark-to-market valuation report- ing and valuation in case of delegated reporting; « Reporting of backloaded trades for centrally cleared contracts; « Reporting of empty fields when the field is rele- vant for the type of contract or trade; « Reporting of contracts with no maturity date (e.g. CFDs); « Reporting changes of notional (e.g. partial ter- minations); The updated version of 10 July 2014 includes amendments and modifications of the sections regarding: « The status of entities not established in the Un- ion, specifically the clearing obligation for pen- sion schemes established in third countries; « The segregation and portability requirements for CCPs, specifically clarification of the segregation requirements for non-EU clearing members of EU CCPs. « Reporting of novations.

Rules of procedure for ESMA penalties imposed on trade repositories Background On 4 July 2012, the European Parliament and the Council adopted Regulation (EU) no. 648/2012 on OTC derivatives, central counterparties and trade repositories (European Market Infrastructure Regulation or EMIR), which entered into force on 16 August 2012. Article 64 (7) of EMIR empowers the European Com- mission to lay down rules of procedure for the exer- cise of the power to impose fines or periodic penalty payments by the European Securities and Markets Authority (ESMA) upon trade repositories and per- sons involved in trade repositories. On 13 March 2014, the Commission indeed issued a delegated act on this matter, namely Commission Delegated Regulation (EU) no. 667/2014. What’s in there? CommissionDelegatedRegulation (EU) no. 667/2014 supplements EMIR by laying down rules of proce- dure regarding fines and periodic penalty payments to be imposed by ESMA on trade repositories or oth- er persons that are subject to ESMA’s investigation and enforcement proceedings, including rules on the right of defence (e.g. right to be heard, access to the file), limitation periods for the imposition and enforcement of penalties and the collection of fines or periodic penalty payments. CommissionDelegatedRegulation (EU) no. 667/2014 was published in the Official Journal of the EU on 19 June. CommissionDelegatedRegulation (EU) no. 667/2014 entered into force on 22 June 2014. What’s next?

On 8 May 2014, the Presidency of the Council issued a second compromise proposal ( AVAILABLE HERE ). On 27 May 2014 and 4 June 2014, the Council of the EU published two further presidency compromises (10215/14 AVAILABLE HERE and 10583/14 AVAIL- ABLE HERE ). What’s in there? On 25 June 2014, the Permanent Representatives Committee agreed, on behalf of the Council, on a general approach in order to start negotiations with the European Parliament with a view to reaching an agreement at first reading. Compared to the last version issued on 4 June, the main changes to the ELTIF framework are as follows: « ELTIFs will not be allowed to transform themselves into collective investment undertakings which are not covered by the ELTIF Regulation; « Where the lifecycle of an ELTIF that is offered or placed to retail investors exceeds 10 years, the ELTIF manager or distributor will need to is- sue a clear written alert that this product may not be suitable for retail investors who are unable to sustain such a long term and illiquid commitment; « ELTIFs managers directly marketing such vehicles to retail investors will need to be authorised as portfolio managers or investment advisors; « Where the portfolio of a retail client does not ex- ceed EUR 500,000, the ELTIF’s manager will have to ensure that the retail investor does not invest an aggregate amount exceeding 10% of his finan- cial instrument portfolio in ELTIFs, provided that the minimum amount invested in a single ELTIF is € 10,000. What’s next? The Italian presidency has been invited to start nego- tiations with the European Parliament, on the basis of the Council's general approach. The Regulation needs to be adopted by the Parlia- ment and the Council. The Regulation will enter into force 6 months after its adoption.

THE TEXT OF THE REGULATION IS AVAILABLE HERE.

THE COUNCIL COMPROMISE IS AVAILABLE HERE.

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