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

ECB to launch QE programme

According to reports, the European Central Bank is widely expected to launch a contested new programme of quantitative easing, details of which

are to be discussed in this week’s council policy meeting. The European Central Bank's executive board has apparently drawn up proposals to buy €

50 billion of sovereign bonds per month until the end of 2016, increasing its balance sheet by as much as €1.1 trillion, although the proposals could still change significantly. Meanwhile, the ECB’s former chief economist, Juergen

Stark, has said this week that deflation fears in the eurozone are "totally exaggerated" and being used as a pretext to push through new controversial

measures. According to Mr Stark, the ECB “wants to drive down the refinancing costs of individual countries. That is very different from traditional monetary policy".

AIFMD passport and third country AIFMs

ESMA has published a list of responses it has received to its November 2014 call for evidence on the EU passport under the AIFMD and third country

AIFMs. The list of responses include: AIMA, the European Fund and Asset Management Association (EFAMA), the European Private Equity and

Venture Capital Association (EVCA), the British Private Equity and Venture Capital Association, the Association of Investment Companies (AIC), the

Investment Association (IA) and the Law Society. ESMA is required to deliver an opinion and advice to the European Commission by 22 July 2015.

ESMA publishes guidelines compliance table

ESMA has published a guidelines compliance table (ESMA/2014/642) relating to its guidelines on co-operation arrangements and information exchange. The table lists the jurisdictions whose national competent

authorities (NCAs) have informed ESMA whether they comply or intend to comply with the guidelines. All NCAs who have responded to ESMA are

listed as complying with the guidelines, which have applied since 26 March 2014.

ESMA enters MoU with HK under EMIR

ESMA has published a memorandum of understanding which it has entered into with the Hong Kong Securities and Futures Commission (SFC) under EMIR, effective as of 19 December 2014. The MoU sets out the co-

operation arrangements between the two authorities regarding central counterparties (CCPs) that are established in Hong Kong and which have

applied to ESMA for recognition under Article 25 of EMIR. As well as establishing these arrangements, the MoU will provide ESMA with adequate tools to monitor the on-going compliance by the CCPs with the recognition

conditions in Article 25. EMIR provides for co-operation arrangements to be established by ESMA and non-EU authorities whose legal and supervisory framework for CCPs have been deemed equivalent to EMIR by the

European Commission.

ESMA may agree new deadline for margin requirements

ESMA Chair, Steven Maijoor, said this week that ESMA hopes to agree a

new timeline for introducing margin requirements for OTC derivatives transactions in the near future, after the December 2015 deadline met with

strong resistance from the international banking industry. The banks have said there is not enough time to do the operational and legal work necessary to implement the post-crisis rules. ISDA wrote to the Basel Committee on

Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) in August last year requesting a delay to

the new rules and has said it would be "supportive of a revised timeline" which would allow banks to transition to the new rules "in a safe and

efficient way that minimises market disruption".

Greece debt level threat to the eurozone

According to analysts, the EU will have to take urgent steps to deal with

Greece’s unsustainable debt level, whichever party wins the general election this Sunday in order to restore confidence in the struggling eurozone. The debt currently stands at 177.7% of Greece’s economic output. The radical

left-wing Syriza party, which is anti austerity, is expected to win the snap elections and despite the EU's official stance that it is a matter for Greek

voters, some member states have given veiled warnings about the dire consequences of a Tsipras win, with German newspapers reporting that Berlin has made preparations for Greece leaving the euro. European

Commission President Jean-Claude Juncker has also warned Greek voters against the "wrong election result".

New push on financial transaction tax

France and Austria have sought this week to break the deadlocked talks on the FTT by proposing that it be applied to a wide range of transactions but at

low rates from next year. In a joint letter to their counterparts, the French and Austrian finance ministers have sought a new approach, suggesting that they resume "… the work on a different footing to the approach that led to

the negotiations hitting a wall in 2014….This fresh direction would be based on the assumption that the tax should have the widest possible base and low rates". The French and Austrian ministers are hoping that ministers will

discuss this new approach when EU finance ministers in Brussels meet next week and have also suggested that one of the 11 ministers involved take

charge of steering forward negotiations.

Cummings

Tel: + 44 20 7585 1406

Mob: + 44 7734 057 327

www.cummingslaw.com 23 January 2015