1. 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
Bonus cap proposals
The Bank of England is proposing rules requiring banks to change senior
executives’ contracts so that their bonuses can be clawed back up to six years
after they have been paid out. The proposed rule will come into effect next year
and would allow a bonus to be reclaimed if there is evidence of ‘misbehaviour or
material error’, major financial problems or failures of risk management. Current
rules only allow clawback in respect of bonuses which have been awarded but
not yet paid. Clawbacks will not only apply to staff directly involved in
misconduct, but also to those who could have been ‘reasonably expected’ to be
aware of the failure or misconduct and failed to take action. The PRA has invited
comments on the plans, which would cover bonuses awarded before 1 January
this year but not yet paid.
l Bank of England investigation into FX rigging
The Bank of England has published details of its internal investigation into the
role of BoE staff in the FX market. Lord Grabiner QC has been appointed to lead
the investigation, which will focus on whether any bank officials were aware of

2. the attempts to rig the FC markets. The outcome of the Bank’s internal review
was announced last week and the Bank’s oversight committee decided to launch
a formal inquiry after the Bank revealed it had suspended a member of staff.
Mark Carney said this week that the scandal had the potential to be bigger than
the rigging of Libor, as it goes to the heart of the integrity of the markets.
FCA update on AIFMD applications
The FCA has said that it has received a positive response to its request for early
AIFMD applications. It says that it has received 103 full-scope and 95 small
AIFM applications during January alone. The FCA says that its large team of
officers is taking an ‘all-hands-on-deck’ approach and hopes that this will ensure
that applicant firm s will meet the 22 July deadline. The FCA has also clarified,
with regard to the VoP form, that firms should only select additional ancillary
activities where they are necessary for the activities that the firm intends to carry
out and which can be referenced back to the accompanying regulatory business
plan.
Cayman Islands releases advice on FATCA officer role
The Cayman Islands government has published an industry advisory on the
FATCA Responsible Officer Role. The advisory states that the FATCA
Responsible Officer role is - and always will be - a requirement of the IRS and is
not subject to any changes from Cayman Islands legislation. This advisory is
welcome news to those fund sponsors that were adopting a "wait and see"
approach and relying on the release of Cayman Islands legislation before
finalizing their FATCA preparations, by providing clarity on this issue and
removing any doubt. The advisory confirms that any director or officer of a
Cayman Islands investment fund, based anywhere in the world, can serve as its
FATCA Responsible Officer to comply with FATCA.

3. FCA speech on capital markets
The FCA has published a speech given by David Lawton, director of markets,
which concentrates on the ‘big picture’ for capital markets. Mr Lawton considers
that the balance of regulation has shifted from the domestic to the international
and this change of emphasis has had some success, such as the work on EU and
US cross-border regulation, for example. He also states that at an EU and global
level, some clear themes have emerged, namely increased transparency,
reporting and higher standards of risk management.
More rate-rigging
In the latest of a series of global rate-rigging scandals, it appears that traders at
UBS attempted to rig the Hong Kong interbank offered rate (Hibor) fixing
between 2006 and 2009. The Hong Kong Monetary Authority has found no
evidence of collusion with other banks in the region, however. The investigation
by the Hong Kong Monetary Authority as regards Hibor follows recent
investigations of alleged manipulation of both Libor and Euribor.
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
14 March 2014