29.09.2017 | KPMG Law Insights

Alternative Investments Legal – Alternative Investments Legal | Issue 9/2017

Dear Readers,

warm clothing is required due to the weather. This also applies with regard to various regulations that will come into force next year. There are current developments in this respect, for example in connection with EMIR and MiFIR; you will find a corresponding compilation in this issue. Furthermore, BaFin has published a circular on derivative financial instruments and structured products.
We would be happy to discuss these latest – albeit less asset-heavy – and all other topics from the field of alternative investments on the asset class real estate with you at our KPMG booth at Expo Real in the first week of October. Visit us!

We wish you an insightful reading and remain
With best regards

Dr. Ulrich Keunecke


Publication of final guidelines on data transfer between trade repositories under EMIR

On August 24, 2017, the European Securities and Markets Authority (ESMA) published final guidelines on data transfer between eligible trade repositories (TRs) under the European Market Infrastructure Regulation (EMIR).

Currently, there are seven authorized TRs operating in the European Union (EU) and data portability is considered essential for data quality, competition between TRs and likewise for risk monitoring by authorities.

The guidelines create a unified and harmonized approach to performing data transfer between TRs. The guidelines cover the transmission of data at the request of a TR participant as well as the transmission of data upon withdrawal of TR registration.

Following the publication of the final report on the guidelines, they will become applicable on October 16, 2017, and will require an annual compliance assessment.

The report can be here can be viewed.


Circular letter announcing the pursuant to Art. 1 (6) MiFIR existing exemption from pre- and post-trade transparency requirements for transactions in pursuit of monetary and financial stability policy.

On August 22, 2017, the Deutsche Bundesbank commented on MIFIR (Regulation (EU) No. 600/2014 of the European Parliament and of the Council of May 15, 2014 on markets in financial instruments and amending Regulation (EU) No. 648/2012 (OJ L 173, 12.06.2014, p. 84)), which enters into force on January 3, 2018, in Circular No. 53/2017.

MiFIR1, which comes into force on January 3, 2018, establishes a new framework for transactions in financial instruments that sets out uniform requirements for the publication of trading data, including by introducing new rules on pre- and post-trade transparency for non-equity instruments.

The obligation to disclose trading data applies to all investment firms, market operators and regulated trading venues covered by the Regulation, but not universally. According to Art. 1(6) MiFIR, all transactions in non-equity instruments where the counterparty is a member of the European System of Central Banks (ESCB) and which are carried out by the latter in the exercise of its statutory powers to implement monetary policy, reserve management policy or financial stability policy are expressly exempt from this requirement, provided that it has notified its counterparty in advance that the transaction is subject to the exemption.

Against this background, the circular primarily serves to announce exemptions from the pre- and post-trade transparency requirements for transactions conducted by the Deutsche Bundesbank in the exercise of its monetary and financial stability policy.

The circular can be viewed here.


Statement on the ESMA Consultation Paper on the Trading Requirement for Derivatives

According to its press release of August 25, 2017, the German Insurance Association (GDV) has commented on the consultation paper published by the European Securities and Markets Authority (ESMA) on the introduction of mandatory trading for certain derivatives subject to clearing.

The trading obligation aims to allow certain standardized derivative classes to be traded in the future only on regulated markets, multilateral or organized trading facilities and equivalent third-party trading venues. In order to be subject to mandatory trading, a class of derivatives must be subject to clearing, admitted to trading on at least one trading venue and sufficiently liquid.

In its statement, GDV critically highlighted the following points:

  • The proportionality principle should be given due consideration in regulation.
  • Sufficient lead time should be allowed for the introduction of trading obligations.

The press release can be here and the statement


Circular 08/2017 (VA) – Derivative financial instruments and structured products

BaFin published a circular on derivative financial instruments and structured products on August 30, 2017, which was consulted on in January.

The circular provides guidance on the use of derivative financial instruments and investment in structured products by primary insurance undertakings to which the provisions for small insurance undertakings (sections 212 to 217 VAG) apply, as well as domestic pension funds and pension funds.

It substantiates Section 15 (1) Sentence 2 ISA as well as the Investment Regulation and Chapter 4 of the Pension Fund Supervision Regulation and replaces the Derivatives Circular published in 2000 as well as the Structured Products Circular from 1999.

It also overturns BaFin’s 2005 interpretive decisions on the use of receiver forward swaps, 2012 inflation swaps, and 2013 prepurchase quotas.

The circular comes into force upon its publication.

The circular can be viewed here.

EU Commission

Report of the EU Commission on the temporary exclusion of exchange-traded derivatives from the scope of MiFiR

On September 11, 2017, the European Commission published its report on the assessment of the need to temporarily exclude derivatives (“ETDs”) from the scope of Articles 35 and 36 of Regulation (EU) No. 600/2014 on markets in financial instruments (“MiFIR”).

In this context, Article 52(12) requires the European Commission to report to the European Parliament and Council on the need to exclude ETDs from the non-discriminatory access regimes to central counterparties (CCPs) and trading venues under Articles 35 and 36 of MiFIR for up to thirty months after January 3, 2018.

In doing so, the European Commission should base its report on a risk assessment carried out by ESMA in consultation with the ESRB and take into account those risks arising from open and non-discriminatory access rules for ETDs with regard to the stability and orderly functioning of financial markets across the Union.

In its report, the Commission notes that the implementation of open and non-discriminatory access to ETDs under MiFIR could pose certain risks, potentially threatening the smooth and orderly functioning of markets or affecting systemic risk. However, after examining these risks, the Commission concludes that the current regulatory framework in MiFID and EMIR has adequately addressed the potential risks.

Thus, it is not necessary to temporarily exclude exchange-traded derivatives from the scope of Articles 35 and 36 of MiFID.

The report can be here can be viewed.


IASB announces Practice Statement 2 on materiality assessment and publishes an exposure draft – definition of materiality

On September 14, 2017, the International Accounting Standards Board (Board) issued guidance on assessing “materiality” and published a draft definition of “material” (Proposed Amendments to IAS 1 and IAS 8).

The guidance document is intended to assist companies in disclosing financial information that is decision-useful to existing and potential investors, capital providers and other lenders when making decisions about whether to provide resources to the company.

The proposed amendments to IAS 1 and IAS 8 are intended to sharpen the definition of “material” and to harmonize the various definitions in the framework and in the standards themselves.

Comments are due by January 15, 2018.

The press release on the guidelines can be here can be viewed here.


Submission of the procedure for ETD access to CCPs under MiFID II.

On September 15, 2017, the European Securities and Markets Authority (ESMA) adopted a procedure under the Financial Instruments Regulation (MiFIR) that provides for fiduciary transactions for the temporary weighing of access provisions for exchange-traded derivatives (ETDs).

MiFIR establishes non-discriminatory and open access regimes for trading venues and central counterparties (CCPs). In particular, trading venues are required to provide access to data feeds on a non-discriminatory and transparent basis to CCPs wishing to execute transactions on those venues.

The relevant notifications stating that the trading venue cannot use the access rights for exchange-traded derivatives covered by the relevant threshold during the period of non-participation shall be sent to ESMA by the end of September 2017.

The procedure can be here can be viewed.

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Dr. Ulrich Keunecke

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