Welcome to Euro Shorts, a short briefing on some of the week’s developments in the financial services industry in Europe.

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

Eurex receives authorisation under EMIR

Eurex Clearing, Deutsche Borse’s clearing house, has become the fourth central counterparty (CCP) to receive authorisation under EMIR after receiving approval from BaFIN this week. Eurex is one of the largest post-trade providers in Europe and clears products including cash equities, bonds and derivatives. The authorisation follows that of Nasdaq OMX, EuroCCP and Polish post-trade provider KDPW. According to reports, Eurex Clearing’s approval was delayed in part due to legal issues around how it ring-fences client assets and it was required to ensure that the way it protects buyside assets was compatible with bankruptcy laws in each Member State. Nasdaq's approval last month means the clearing of European swaps could begin by December at the earliest, if the subsequent regulatory process runs smoothly.

IMF praises UK economy growth

The International Monetary Fund has predicted that the UK economy will grow faster than any other leading economy this year. This is in contrast with its criticism last year of George Osborne’s austerity policies, when it claimed that he was ‘playing with fire’. The IMF has raised its forecast for UK growth to 2.9% this year, which is the fastest of any G7 country. The upgrade is almost double the IMF’s prediction a year ago and the IMF praised Mr Osborne for sticking to his fiscal plan.

Greece success in the bond markets

Greece returned to the bond market this week and issued €3 billion of five-year bonds. The return was considered a great success for Greece, with the bonds yielding 4.95%; this is the second lowest borrowing costs for a bailed-out eurozone state. According to reports, the bonds attracted investors because they offer a relatively high return in an era of ultra-low interest rates. Expectations that the European Central Bank will take further steps to boost the euro zone economy are also fuelling appetite for bonds issued by the bloc's riskier countries.

German finance minister warns of complacency

The German finance minister Wolfgang Schaeuble said this week that Europe is on the way to recovery, but that it would be wrong to assume the crisis is over, adding that ‘the most risk is always complacency’. He also reacted to IMF advice to boost investment by saying he ‘can't bear hearing’ the debate over fiscal austerity versus pro-growth policies anymore. He was speaking a day after the IMF again encouraged Germany to invest more to boost domestic demand and after Mr Schaeuble promised a balanced budget from next year. The IMF advice is in line with that of the European Commission and the OECD, which both want Europe's biggest economy to boost demand at home.

Eurozone budgetary rules at risk

The Bundesbank’s president has warned that the credibility of the eurozone's budgetary rules is at stake and that France's suggestion that the bloc's budget deficit targets be weakened are a test case for the rules. The warning came in response to France's new finance minister, Michel Sapin's comment last week that the country would seek a review of its deadline for meeting the EU's budget deficit ceiling of 3%. The president said that it was vital the EU stick to the rules, because their credibility of the rules was otherwise at stake. He added that a currency union needed its members to aim for stability and that part of that was having an orderly budget and sticking to the rules.

Single-member private company proposed directive

The European Commission has published a proposal for a directive on single-member private limited liability companies. The proposed directive will require member states to provide in their national company law for a form of single-member limited liability company to be established, which will be known as a SUP (Societas Unius Personae). The proposed directive sets out various features of SUPs that member states must provide for within their national laws, including in relation to electronic registration, share capital, the articles, distributions and single-member decisions. The proposal will next be considered by the Parliament and the Council under the ordinary legislative procedure. It is intended that the proposed directive must be implemented within two years of adoption.

UK interest rates on hold

The Bank of England has kept UK interest rates on hold at their record low of 0.5% for another month. No change had been expected, despite recent evidence of the UK’s recovery. The recent fall in the rate of inflation has also reduced any pressure on the Bank's monetary policy committee to raise rates. The UK's inflation rate fell to 1.7% last month, which was a four-year low and below the Bank's target of 2%.

Cummings

Tel: + 44 20 7585 1406 Mob: + 44 7734 057 327

www.cummingslaw.com 11 April 2014