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Regional Legal and Regulatory Issues March 2014. Clifford Chance Agenda and status Extra-territoriality impact CRD IV Status / upcoming Extra-territoriality.

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Presentation on theme: "Regional Legal and Regulatory Issues March 2014. Clifford Chance Agenda and status Extra-territoriality impact CRD IV Status / upcoming Extra-territoriality."— Presentation transcript:

1 Regional Legal and Regulatory Issues March 2014

2 Clifford Chance Agenda and status Extra-territoriality impact CRD IV Status / upcoming Extra-territoriality of EMIR Documentation Projects Status of HK OTC Derivatives Reforms EU Resolution Directive Status Bail in Agenda Regional Legal and Regulatory Issues 2 EU's too big to fail initiatives OTC Reforms in Europe Hong Kong – Securities and Futures Amendment Bill Clifford Chance Margin for uncleared swaps Hong Kong Resolution Proposals Consultation Process

3 Clifford Chance Hong Kong Australia China Japan Korea Singapore Agenda (continued) Regional Legal and Regulatory Issues 33Clifford Chance EU MiFID2/MiFIR EU shadow bank reforms update EU securities depository directive AsiaPac OTC reform

4 Clifford Chance Ending Too Big to Fail – the Global Plan 4 Regional Legal and Regulatory Issues 1 Reducing probability of distress Basel III capital rules and stress tests Capital surcharge for globally systemically important banks Controlling size of banks Improved supervision 2 Reducing adverse consequences of distress Recovery and resolution planning Structural changes to banks New resolution powers as alternative to conventional insolvency process Deposit guarantee reforms 3 Reducing transmission of distress Basel III charges on intra-system exposures Derivatives reforms (central clearing and collateral) Robust financial market infrastructure

5 Clifford Chance Overview of CRD IV CRD 5 Regional Legal and Regulatory Issues Basel III Passporting Remuneration Governance CRR

6 Clifford Chance CRD IV Timeline NB: Any frontrunners? 6 Regional Legal and Regulatory Issues CRD IV package (Regulation (CRR) and Directive (CRD)) published in the Official Journal on 27 June 2013 CRR entered into force on 28 June 2013 and will apply from 1 January 2014 CRD entered into force on 17 July 2013 and needs to be implemented by EU member states (with the exception of new rules regarding capital buffers which come into effect on 1 January 2016) by 31 December 2013 Liquidity coverage ratio to be phased in between Leverage ratio to be introduced from 2018 Net Stable Funding Ratio to be introduced from 2018 Firms to report from 1 January 2014 on Leverage Ratio, Liquidity Coverage Ratio and Net Stable Funding Ratio 27 June June July – January

7 Clifford Chance Status of EMIR 7

8 Clifford Chance8 EMIR (August 2012) Short Selling Regulation (November 2012) AIFMD (July 2013) CRD IV / CRR (1 Jan 2014) FTT (2014?) MAD 2 (expected to be applied at the same time as MiFID2) MiFID2 / MiFIR Timeline for European OTC Derivatives Reform 8 Regional Legal and Regulatory Issues Proposed regulation on CSDs (2015) Margin requirements for uncleared swaps (from 2015) Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q3Q1Q Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q3Q1Q4

9 Clifford Chance NFC+ notification, timely confirmation, daily valuation Portfolio reconciliation, compression, dispute resolution Mandatory Reporting Obligation Mandatory Clearing Obligation Margin requirements for uncleared OTC derivatives EMIR regulates OTC derivatives, CCPs and trade repositories and came into force on 16 August However, many obligations require secondary legislation in order to become effective. The first of these obligations became effective in March 2013 and September EMIR Timeline 9 Regional Legal and Regulatory Issues 15 March September February 2014 Summer 2014? Expected December 2015

10 Clifford Chance10 EMIR FAQs for APAC Clearing Why is my counterparty asking me what my status is under EMIR? What is Article 25 and how does it impact on clearing of all derivatives overseas? Reporting Do I, and if so, where do I have to report? What are my global confidentiality, data privacy and other regulatory issues? Risk Mitigation My bank / client wants me to sign up to the ISDA EMIR Protocols. What do these documents do? Branches Is there any difference if I face a non-EU branch or an APAC subsidiary or an EU bank? Non-EU trades Neither my counterparty nor I are EU entities. Can EMIR still apply? EMIR FAQs for Asia Based Market Participants Regional Legal and Regulatory Issues

11 Clifford Chance11 ObligationFCsNFC+sNFC-sTCEs Clearing  * Reporting * Risk Mitigation: Confirmations * Portfolio Reconciliation, Portfolio Compression and Dispute Resolution * Daily Valuation  * Margining  * Capital  * EMIR Obligations for Different Entities *On 17 July 2013, ESMA published a consultation paper on the draft RTS on contracts having a direct, substantial and foreseeable effect within the Union and non-evasion of provisions of EMIR (i.e. application of EMIR to non-EU trades). The draft TRS is due to be delivered by ESMA on 15 November Regional Legal and Regulatory Issues

12 Clifford Chance12 Timely confirmation † Appropriate procedures and arrangements for confirmation Via electronic means where available As soon as possible, by T+1 (or T+2 for trades with non-financial counterparties) Deadlines phased in by counterparty and asset class in stages from 15 March 2013 to 31 August 2014 Financial counterparties to have procedures to report to regulator monthly number of trades unconfirmed for > 5 business days Portfolio compression Financial counterparties and non- financial counterparties with portfolio ≥ 500 trades Must address portfolio reconciliation opportunities on six monthly basis ** Dispute resolution † Counterparties must agree detailed procedures and processes for: Identification, recording, monitoring of disputes Timely resolution of disputes Financial counterparties to report to regulator disputes > €15m outstanding for ≥ 15 business days Portfolio reconciliation † Counterparties must agree portfolio reconciliation arrangements Covering key trade terms and mandatory valuations Frequency varies by counterparty type and portfolio size: daily, weekly, quarterly, annually Daily valuation Financial counterparties and non- financial counterparties over clearing threshold must carry out daily mark to market/model valuations of transactions EMIR – Risk Mitigation Regional Legal and Regulatory Issues †Applicable even if only have one swap with counterparty. No de minimis exemption * *On 12 August 2013 the U.K. regulation (the Financial Conduct Authority “FCA”) published a webpage about notifications and exemptions under EMIR. The webpage explains that the FCA are developing a web portal for notifications and exemptions required to ensure EMIR compliance.

13 Clifford Chance On 13 February 2014, the European Commission adopted the RTS on contracts having a “direct, substantial and foreseeable effect within the EU and on non-evasion of provisions of EMIR and non- evasion”. These RTS address EMIR Article 4(4) (in relation to the clearing obligation) and Article 11(14)(e) (in relation to the risk mitigation obligations). The draft RTS covers: OTC derivative contracts entered into between two counterparties established in third countries What would be considered to be “direct, substantial and foreseeable effect” within the EU When it is necessary to apply the provisions of EMIR in order to prevent evasion The provisions in these RTS will become effective six months after the RTS comes into force. Regulatory Technical Standards on Extraterritoriality 13 Regional Legal and Regulatory Issues Clifford Chance

14 “Direct, Substantial and Foreseeable Effect within the EU” Under the RTS: Equivalent third countries Article 13 relief will apply to transactions between two third country entities where at least one counterparty is established in the equivalent third country “the provisions of EMIR can be disapplied” vs “counterparties shall be deemed to have fulfilled the obligations” Which contracts would have a “direct, substantial and foreseeable effect”? Guaranteed OTC derivative contracts –Guaranteed by an EU financial counterparty – direct effect –Amount of guarantee exceeds two cumulative thresholds – substantial effect –ESMA considers that the proposed tests above are sufficiently clear that counterparties can predict which contracts will be within scope – foreseeable EU branches of non-EU entities –Contracts concluded with another EU branch of a non-EU entity (but not with an EU entity or non-EU entity) – direct effect –Contracts concluded with another EU branch of a non-EU entity from a non-equivalent jurisdiction – substantial effect –Counterparties can predict which contracts will be within scope – foreseeable 14 Regional Legal and Regulatory Issues

15 Clifford Chance ESMA’s 2013 Equivalence Assessments

16 Clifford Chance On 3 September 2013, ESMA delivered its first technical advice to the Commission on the equivalence of six jurisdictions (US, Japan, Australia, Hong Kong, Singapore, Switzerland) for the purposes of EMIR. Further reports were published by ESMA on 2 October EMIR – Status of Equivalence Assessments 16 Regional Legal and Regulatory Issues 16 CCPsTrade repositoriesArticle 13 EMIR USConditional equivalence Partial/conditional equivalence JapanConditional equivalencePostponed Not yet equivalent for risk mitigation. Conditional equivalence for clearing. Australia Equivalence except ASX equities clearing Equivalence Not yet equivalent for risk mitigation. Conditional equivalence for clearing. Hong KongConditional equivalence Premature to give advice due to absence of rules SingaporeConditional equivalence Not planned SwitzerlandEquivalenceNot planned Premature to give advice due to absence of rules CanadaNot planned Not yet equivalent IndiaConditional equivalenceNot planned South KoreaConditional equivalenceNot planned Rest of worldNot planned

17 Clifford Chance ISDA EMIR Protocols / Documents

18 Clifford Chance18 ProsCons Public Restrictions on withdrawal Inflexible Efficient Market standard solution No requirement to negotiate EMIR – ISDA Protocols / Documents Multilateral contractual amendment mechanism Market participants can adhere to an ISDA Protocol (even if they are not an ISDA member) Ongoing discussions with counterparties in APAC Regional Legal and Regulatory Issues

19 Clifford Chance19 ISDA EMIR Documents Standard Amendment Agreement for Timely Confirmations (March 2013) 2013 EMIR NFC Representation Protocol (March 2013) 2013 EMIR Portfolio Rec, Dispute Res and Disclosure Protocol (July 2013) EMIR – ISDA Protocols / Documents (continued) Regional Legal and Regulatory Issues

20 Clifford Chance20 EMIR – ISDA Standard Amendment Agreement for Timely Confirmations Regional Legal and Regulatory Issues ■Article 11(1)(a) – “the timely confirmation…of the terms of the relevant OTC derivative contract” What aspect of EMIR does it address? ■It adds additional provisions to the Schedule of your ISDA Master Agreement with your counterparty What does this document amend? ■Each “Relevant Confirmation Transaction” needs to be confirmed by the “Timely Confirmation Deadline” What obligation(s) does this document create? ■“Documenting Party” vs “Receiving Party” ■Negative affirmation What elections do I need to make? ■Changing from Event of Default to Additional Termination Event What should I be aware of?

21 Clifford Chance21 EMIR – ISDA 2013 EMIR NFC Representation Protocol NB: AS AT 7 JANUARY 2014, THERE ARE 1,316 ADHERING PARTIES Regional Legal and Regulatory Issues ■Your classification as a NFC+ or NFC- under EMIR What aspect of EMIR does it address? ■Clearing ■Timing of confirmations ■Frequency of portfolio reconciliation ■Daily valuation Why is it important to distinguish between NFC+ and NFC-? ■A representation of your status ■Delivery of “change of status” notices What obligation(s) does this document create? ■NFC+ vs NFC- vs No representation ■Notice delivery method What elections do I need to make? ■Consequence of breach of NFC representation ■Balancing Payments What should I be aware of?

22 Clifford Chance22 EMIR – ISDA 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol NB: as at 7 January 2014, there are 8,416 adhering parties NB: ISDA Standard Amendment Agreement – 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Form Regional Legal and Regulatory Issues ■Article 11(1)(b) – “formalised processes…to reconcile portfolios” and “to identify disputes between parties…and resolve them” ■Article 9 – “details of any derivative contract…reported to a trade repository” What aspect of EMIR does it address? ■“Portfolio Data Sending Entity” – provide portfolio data ■“Portfolio Data Receiving Entity” – perform data reconciliation ■Resolution of disputes ■Confidentiality waiver What obligation(s) does this document create? ■“Portfolio Data Sending Entity” vs “Portfolio Data Receiving Entity” ■Business Day election What elections do I need to make? ■No Event of Default or Termination Event ■Two Portfolio Data Receiving Entities ■Dispute Notice ■Limitations of confidentiality waiver What should I be aware of?

23 Clifford Chance Status of HK OTC Derivatives Reforms

24 Clifford Chance24 *Joint consultation conclusions on the proposed regulatory regime for OTC derivatives market in Hong Kong. **Supplemental consultation on the OTC derivatives regime for Hong Kong – proposed scope of new/expanded regulatory activities and regulatory oversight of systemically important players. Possible Implementation Timeline for HK Reforms Regional Legal and Regulatory Issues Q2Q3Q4Q1Q2Q3Q4Q3Q1Q4Q OTC Clear has RCH status HKMA/SFC publish joint consultation conclusions * HKMA/SFC publish supplemental consultation ** on scope of new regulated activities (Types ) + SIP Phase 1: Interim reporting requirement announced Backloading for interim reporting to begin August Drafting subsidiary legislation and public consultation expected Mandatory interim reporting began on 9 December Earliest start date for mandatory reporting and clearing in Hong Kong? Securities and Futures (Amendment) Bill published. First reading at Legco on 10 July Q2Q1Q2Q3Q4Q3Q1Q4Q1Q3Q4 Mandatory clearing

25 Clifford Chance BCBS-IOSCO Final Policy Framework for Margin Requirements for Uncleared Derivatives

26 Clifford Chance Introduction BCBS-IOSCO have published a final policy framework setting minimum standards for margin requirements for uncleared derivatives “Margin requirements for non-centrally cleared derivatives” (September 2013) published by the Basel Committee on Banking Supervision (BCBS) and the International Organisation of Securities Commissions (IOSCO) Follows first and second consultation documents published by BSBS-IOSCO in July 2012 and September 2013 (the second consultation document included the results of a quantitative impact.study) Response to G20 Cannes November 2011 declaration calling for BCBS-IOSCO to develop standards on margin for uncleared derivatives BCBS-IOSCO to create monitoring group to work during 2014 Monitoring group will evaluate the standards, focusing on relation and consistency of standards with other initiatives including: changes to trading book and counterparty credit risk. potential minimum haircuts for repos/reverse repos, implementation of the liquidity coverage ratio and capital requirements for central cleared derivatives Further analysis of costs and benefits and overall efficiency and appropriateness of regime, including macroeconomic impact Possible areas for review include: –Possible alignment of the model and standardised schedule approaches for calculating initial margin; –Guidance on validation and backtesting of models for margining; –Risks of not subjecting the fixed physically settled FX transactions associated with the exchange of principal of cross- currency swaps to the initial margin requirements (and possible adjustments to this exception) Likely next steps EU: ESAs to consult on regulatory technical standards setting margin requirements for financial counterparties and non-financial counterparties over the clearing threshold under EMIR for endorsement by the Commission US: CFTC, SEC and prudential regulators continue to consider margin requirements under the Dodd-Frank Act for swap dealers and major swap participants Regional Legal and Regulatory Issues 26

27 Clifford Chance BCBS-IOSCO Final Margin Framework: Universal Two-way Margin System *Margin transfers can be subject to a minimum transfer amount not exceeding €500, Regional Legal and Regulatory Issues Zero threshold for variation margin* ■All covered entities engaging in uncleared derivatives must exchange on a bilateral basis full amount of variation margin (i.e. zero threshold) on a regular basis (e.g.daily) ■Start date 1 December 2015 Maximum €50 million threshold for initial margin* ■All covered entities engaging in uncleared derivatives must exchange on a bilateral basis initial margin with a threshold not to exceed €50 million ■Threshold applies at level of consolidated group to which the threshold is being extended and is based on all uncleared derivatives between the two groups (groups choose how to allocate among group entities) ■Start date 1 December 2015, but phased in over period to 1 December 2019 starting with largest users ■At the end of phase-in, a consolidated group will have to have a minimum level of OTC derivatives business (at least €8 billion total gross notional value) in order to be subject to initial margin requirements Covered entities ■All financial entities and systemically important non-financial entities (defined by national rules) ■Excluding sovereigns, central banks, multilateral development banks and BIS ■National discretion to exclude inter-affiliate transactions ■Foreign branches of banks subject to home or host state rules. Group home state supervisor may choose to recognise.margin regime applicable to foreign subsidiaries if equivalent Covered transactions ■All non-centrally cleared derivatives entered into between covered entities ■Exclude physically settled FX forwards and swaps but these are included in calculating trigger levels for phase in of initial margin requirements and national discretion for supervisory guidance/rules on variation margin ■Initial margin for cross-currency swaps do not apply to the fixed physically settled exchange of FX principal

28 Clifford Chance The revised framework makes a number of significant changes to the proposals in the second consultation document including: 28 Regional Legal and Regulatory Issues Main Changes from Second Consultation 1 The framework sets a revised start date for the new regime (1 December 2015, instead of 1 January 2015) 2 Exemption for physically settled FX forwards and swaps (but national regulators may implement variation margin standards by supervisory guidance or national regulation) but these transactions count towards thresholds determining application of initial margin requirements 3 Initial margin requirements for cross-currency swaps do not apply to the fixed physically settled FX transactions associated with exchange of principal of cross currency swaps (but other cash flows must be subject to initial margin requirements) 4 The requirements will cover transactions indirectly cleared through a CCP and intermediated through a broker unless the non-member customer is subject to the CCP’s margin requirements or provides margin consistent with the CCP’s margin requirements 5 De minimise minimum transfer amounts for margin transfers must not exceed €500,000 (previously €100,000) 6 Managed funds to be considered separate entities outside consolidated group for the purposes of the €50 million initial margin threshold which applies to groups on a consolidated basis. National discretion to exclude public sector entities from margin regime 7 Firms may only rehypothecate or reuse buy-side customer (and not sell-side) initial margin for the purposes of hedging the firm’s exposures to customers and subject to conditions that protect the customer’s rights to the collateral (and ensure only one-time reuse of collateral) 8 Branches of legal entities may be subject to the margin rules of the entity’s home state or the requirements of the host country

29 Clifford Chance29 Regional Legal and Regulatory Issues Objectives of Margin 1 Objectives of margin requirements for non-centrally cleared derivatives: Reduction of systemic risk: reduce contagion and spillover effects from counterparty default plus broader macro-prudential benefits of reducing pro-cyclality and limiting build-up of uncollateralised exposures Promotion of central clearing: margin requirements should reflect higher risk of uncleared trades International consistency: needed to avoid undermining effectiveness of national regimes and competitive disparities 2 Proposals favour margining over capital: Margin is “defaulter-pay” on a counterparty default, where capital is “survivor-pay”. Margin is more targeted and dynamic taking into account risks of losses from a particular portfolio and is adjusted over time, where capital is shared collectively and is more likely to be depleted and is less easy to adjust (also capital requirements are not designed to be sufficient for the default of a particular counterparty, rather reflect a probability of default). Therefore, margin offers enhanced protection against counterparty default if accessible at time of need and capable of being liquidated quickly. But potential benefits must be weighed against the liquidity impact resulting from counterparties’ need to provide liquid, high quality collateral, including the impact on market functioning from aggregate demands for that collateral. 3 Revised proposals aim to take account of potential impact on liquidity by: Allowing use of margin thresholds; Eligibility of a broad range of eligible collateral; Phasing–in the requirements over the period to 2019.

30 Clifford Chance Results of Quantitative Impact Study QIS based on data from 39 institutions including 19 large internationally active dealers QIS firms have €216 trillion of non-centrally cleared derivatives, representing 75% of global total Central clearing mandate will reduce gross notionals of uncleared derivatives by 46% Interest rate/equity derivatives expected to have biggest decline (53%, 56%) compared to FX/other asset classes (13%, 21%) Currently, QIS firms only hold €100bn initial margin against uncleared derivatives Represents 0.03% of gross notional exposure. Initial margin requirements are currently negotiated individually and market practice varies Proposals would result in QIS firms holding €558bn initial margin against uncleared derivatives (if extrapolated to whole global market would require €0.7 trillion initial margin) Estimates assume the reduction in portfolios resulting from mandatory clearing and reflect impact of €50m proposed threshold With zero threshold, required margin would increase to €1.3 trillion (or €1.7 trillion for whole global market) Figures assume use of models to calculate margin: under standardised margin schedule figures could be between 6 and 11 times higher Bilateral initial margin requirements significantly higher than those required for central clearing Bilateral requirements average about 0.5% of gross notional, compared to 0.1% for centrally cleared transactions (i.e. 5 times) Main reason for higher requirements is lack of multilateral netting that is achieved by central clearing Requirements represent 8% of QIS firms’ available unencumbered margin eligible assets But this figure increases to 86% of available liquid assets if standardised margin schedule used Note: All figures are estimates and approximate. 30 Regional Legal and Regulatory Issues

31 Clifford Chance31 Regional Legal and Regulatory Issues BCBS-IOSCO Key Principles 1. Appropriate margining practices should be in place with respect to all derivatives transactions that are not cleared by CCPs. 2. All financial firms and systemically important non-financial entities (“covered entities”) that engage in noncentrally cleared derivatives must exchange initial and variation margin as appropriate to the counterparty risks posed by such transactions. 3. The methodologies for calculating initial and variation margin that serve as the baseline for margin collected from a counterparty should (i) be consistent across entities covered by the requirements and reflect the potential future exposure (initial margin) and current exposure (variation margin) associated with the portfolio of non-centrally cleared derivatives in question and (ii) ensure that all counterparty risk exposures are fully covered with a high degree of confidence. 4. To ensure that assets collected as collateral for initial and variation margin purposes can be liquidated in a reasonable amount of time to generate proceeds that could sufficiently protect collecting entities covered by the requirements from losses on non-centrally cleared derivatives in the event of a counterparty default, these assets should be highly liquid and should, after accounting for an appropriate haircut, be able to hold their value in a time of financial stress. 5. Initial margin should be exchanged by both parties, without netting of amounts collected by each party (ie on a gross basis), and held in such a way as to ensure that (i) the margin collected is immediately available to the collecting party in the event of the counterparty’s default; and (ii) the collected margin must be subject to arrangements that fully protect the posting party to the extent possible under applicable law in the event that the collecting party enters bankruptcy. 6. Transactions between a firm and its affiliates should be subject to appropriate regulation in a manner consistent with each jurisdiction’s legal and regulatory framework. 7. Regulatory regimes should interact so as to result in sufficiently consistent and non-duplicative regulatory margin requirements for non-centrally cleared derivatives across jurisdictions. 8. Margin requirements should be phased in over an appropriate period of time to ensure that the transition costs associated with the new framework can be appropriately managed. Regulators should undertake a coordinated review of the margin standards once the requirements are in place and functioning to assess the overall efficacy of the standards and to ensure harmonisation across national jurisdictions as well as across related regulatory initiatives.

32 Clifford Chance Universal Two-way Margin System *Margin transfers can be subject to a minimum transfer amount not exceeding €500, Regional Legal and Regulatory Issues Zero threshold for variation margin ■All covered entities engaging in uncleared derivatives must exchange on a bilateral basis full amount of variation margin (i.e. zero threshold) on a regular basis (e.g.daily) Maximum €50 million threshold for initial margin ■All covered entities engaging in uncleared derivatives must exchange on a bilateral basis initial margin with a threshold not to exceed €50 million ■Threshold applies at level of consolidated group to which the threshold is being extended and is based on all uncleared derivatives between the two groups ■Up to each group how to allocate the threshold between different entities in the group ■At the end of phase-in, a consolidated group will have to have a minimum level of OTC derivatives business (at least €8 billion total gross notional value) in order to be subject to initial margin requirements Minimum transfer amount ■Margin transfers can be subject to a minimum transfer amount not exceeding €100,000 Dispute resolution ■Parties should have rigorous and robust dispute resolution procedures

33 Clifford Chance Margin Amounts and Methodologies 33 Regional Legal and Regulatory Issues Initial Margin Designed to reflect potential future exposure of a transaction Required amount of initial margin may be calculated by reference to either (i) a quantitative portfolio margin model or (ii) a standardised margin schedule Quantitative portfolio margin model –Models must be approved by the appropriate supervisory authority and be subject to an appropriate governance process –For purposes of informing the initial margin baseline, the potential future exposure of a non-centrally-cleared derivative should reflect an extreme but plausible estimate of an increase in the value of the instrument that is consistent with a one-tailed 99 percent confidence interval over a 10-day horizon, based on historical data that incorporates a period of significant financial stress –Subject to approval by the relevant supervisory authority, netting may be performed within well-defined asset classes (such as currency/rates, equity, credit and commodities), subject to being covered by an enforceable netting agreement, but not across such asset classes Standardised margin schedule Initial margin calculated as a percentage (2% – 15% depending on asset class) of notional exposure Allowed to reduce the gross notional initial margin for derivatives subject to enforceable netting using the net-to-gross ratio used for regulatory capital purposes Can exclude transactions which do not give rise to any counterparty risk (e.g. sold options) Variation Margin For the purpose of informing the variation margin baseline, the full net current exposure of the non-centrally-cleared derivative must be used Netting may be performed across all non-centrally-cleared derivatives under the same netting agreement National Supervisory Discretion BCBS-IOSCO recognise that national supervisors may wish to alter margin requirements to achieve macroprudential outcomes, such as preventing build up of leverage and balance sheet expansion Considering possible macroprudential add-on or buffer on top of baseline or minimum requirements

34 Clifford Chance Phase-in of Requirements 34 Regional Legal and Regulatory Issues From 1 December: Trigger level for consolidated groups 2015€3 trillion 2016€2.25 trillion 2017€1.5 trillion 2018€0.75 trillion 2019 onwards€8 billion Note: based on total gross notional value of uncleared derivatives of the consolidated group (including FX forwards and swaps). Variation Margin Requirement to exchange variation margin between covered entities applies from 1 December 2015 Initial Margin Aim is to ensure that larger and most systemically risky firms are subject to initial margin requirement at an earlier stage Requirement to exchange two-way initial margin with a threshold of up to €50 million staged phased in from 1 December 2015 to 1 December 2019 In each year, covered entities will be subject to requirement if total gross notional value of uncleared derivatives of their consolidated group is over the specified trigger level From 1 December 2019 a permanent exclusion from requirement applies for covered entities if gross notional value of uncleared derivatives of their consolidated group is below trigger level of €8 billion Trigger levels calculated by averaging month-end positions of the consolidated group for June, July, August preceding relevant 1 December A covered entity subject to the initial margin requirement is only required to exchange initial margin with other covered entities also subject to that requirement Regulators to work to ensure sufficient transparency as to which entities are and are not subject to the requirement Comments sought on whether phase-in is appropriate Rules Apply Prospectively Margin requirements apply to new transactions entered into after specified dates (and may also apply if existing transactions amended to extend the contract for the purpose of avoiding margin requirements)

35 Clifford Chance EU Resolution Planning

36 Clifford Chance Bank Recovery and Resolution Directive (RRD) –Crisis Management Directive (CMD) Parameters agreed 27 June 2013 by ECOFIN Final compromise text published 19 December 2013 National legislation by year end Member state compliance by 1 January 2015 Bail in provisions by 2018 The EU Status of Implementation of RRD/CMD Regional Legal and Regulatory Issues 36Clifford Chance

37 Objectives and Principles 37 Regional Legal and Regulatory Issues Objectives (avoid destruction of value, minimise cost of resolution) Ensure continuity of critical functions Avoid significant adverse effects on financial stability Protect public funds Protect depositors and investors Protect client funds and assets Principles Shareholders bear first losses Creditors bear losses after shareholders in order of priority of claims Senior management is generally replaced Former members of management shall provide necessary assistance Senior management are made liable for their individual responsibility Except where otherwise provided, creditors of same class treated equitably No creditor incurs greater loss than in insolvency proceedings Principles Objectives

38 Clifford Chance Key Elements of Directive 38 Regional Legal and Regulatory Issues Resolution Preparation Early intervention Recovery and resolution planning Resolvability assessments Regulators’ powers to address or remove impediments to resolvability Intra-group financial support agreements Harmonised objectives and triggers Common set of resolution tools (sale, bridge bank, asset separation, bail-in) European system of financing arrangements Triggered by failure/likely failure to meet authorisation conditions Regulators’ powers to direct remedial action Power to appoint special manager 1 2 3

39 Clifford Chance Resolution Tools 39 Regional Legal and Regulatory Issues Bridge institutionBail-inAsset separationSale of business Transfer of shares or all/ part of assets/ liabilities to purchaser on commercial terms Transfer of all/ part of assets/ liabilities to asset management vehicles(s) controlled by public authorities Aim to maximise value by sale or ensure orderly wind down Can only be used with other tools Power to write-down eligible liabilities (or convert to shares) to (re)capitalise an institution or bridge institution Mandatory write down of capital instruments Transfer of all/ part of assets/ liabilities to a bridge institution Bridge controlled by public authorities, aim to sell within two years Additional tools and powers at Member State discretion: If do not obstruct effective group resolution and consistent with resolution objectives/principles

40 Clifford Chance Bail-in of Loss Absorbing Capital 40 Regional Legal and Regulatory Issues Update on Bank Capital Aim of Bail in proposal Contrast with contingent capital: Co Co’s No absolute requirement to issue “bail-in bonds” Lessen likelihood of tax payer intervention Exercise of statutory power, not a contractual trigger Co Co’s have clear objective triggers Bail in relies on Regulator’s discretion Co Cos based on going concern trigger Bail in based on resolution authorities determination of non-viability LAC requirement may be fully met with Tier 1 and Tier 2 National resolution authorities to set requirements

41 Clifford Chance Triggers for Tier 1 Capital Article 51 states that a trigger event occurs when the Common Equity Tier 1 capital ratio of the institution falls below a minimum of 5.125% Terms of instrument may specify a higher level or one or more additional triggers Recent example of BBVA banks set out the following 4 trigger events –The CET ratio is less than 5.125% –The Capital Principal Ratio is less than 7% –The EBA CT 1 Ratio is less than 7% –The Tier 1 ratio is less than 6% and the Bank/Group has reported losses for last 4 quarters with result that capital and reserves have been reduced by 1/3rd more. Also BBVA had a non-viability trigger Now seeing non-viability in Asia deals –Who is determining? –How is it being determined? 41 Regional Legal and Regulatory Issues

42 Clifford Chance Hong Kong Consultation on Resolution Joint consultation by Financial Services and the Treasury Bureau, the Hong Kong Monetary Authority, the Securities and Futures Commission and the Insurance Authority Two-stage consultation process Responses by 6 April 2014 for first stage Broad issues to determined –Resolution authority? –Home/host/branches –Scope and balance of requirements for Hong Kong –FMIs –Bail-in provision –Pre-emption, stays and early termination 42 Regional Legal and Regulatory Issues

43 Clifford Chance EU Central Securities Depositories (CSD) Reform Common status: EU presidency annoucement in December 2013 Preliminary political agreement with EU parliament Full text for agreement in 2014 Implementation 2015 Timed with Target 2-securities initiatives Scope and impact Improve settlement of securities Trading under MiFID2 (OTFs etc) Avoid settlement fails Regulation of CSDs Common EU approach for authorisation and supervision 43 Regional Legal and Regulatory Issues

44 Clifford Chance EU Central Securities Depositories (CSD) Reform (continued) Regulation of CSDs competent authority and regulation Supervision and organisational requirements Conduct Management of legal, operational and other risks Capital requirements Conflict of laws Will it improve legal certainty issues? Will they be included? 44 Regional Legal and Regulatory Issues

45 Clifford Chance EU Central Securities Depositories (CSD) Reform (continued) On-going Access With securities issuers Between depositories With other FMIs Restrictions from carrying out other businesses? Cross-border impact Passporting Recognition of 3rd countries Registration Transition timeline 45 Regional Legal and Regulatory Issues

46 Clifford Chance A key focus of G20 and policy makers globally post financial crisis Securities financing integral to shadow banking debate EU – Regulation of Shadow Banking 46 SFTs – perceived risks –‘run risk’ due to procyclical nature of SFTs –high levels of (sometimes hidden) leverage – rehypothecation concerns – who owns collateral when a counterparty defaults? –Contagion risk - high degree of connectedness between banking and shadow banking sectors Regional Legal and Regulatory Issues

47 Clifford Chance Financial Stability Board Shadow Banking Policy for SFTs Regional Legal and Regulatory Issues Two ‘workstreams’ focusing on SFTs: WS3 and WS5 WS5 proposals – to make the securities financing markets more robust e.g. enhanced transparency, improvements to market structure etc. WS5 consulting on minimum standards for haircut methodologies and numerical haircut floors WS3 (‘other shadow banking entities’) focus on risky activities, –primarily short term funding e.g. SFTs –policy tools – imposing bank like regulatory capital requirements (liquidity buffers, leverage limits, large exposures limits, restrictions on types of liabilities held) Implementation date unknown – will depend on national implementation 47

48 Clifford Chance EU Regulation on Reporting and Transparency of SFTs Regional Legal and Regulatory Issues 29 January 2014 – Commission proposed regulation on reporting transparency of securities financing transactions Scope –Parties to securities financing transactions or financing structures with equivalent economic effect –UCITS managers and investment companies –AIFMs –Parties to rehypothecation arrangements Implementation – unknown at present 48

49 Clifford Chance EU Regulation on Reporting and Transparency of SFTs – Key Features All SFTs to be reported to a central repository Detailed reporting on SFT activity by investment funds (including UCITS and AIFs) Prior risk disclosure and express written consent required before any rehypothecation of assets Regional Legal and Regulatory Issues 49

50 Clifford Chance MiFID2 / MiFIR 50 Regional Legal and Regulatory Issues

51 Clifford Chance Why the New Legislation? 51 Regional Legal and Regulatory Issues Scheduled review of 2003 MiFID1 Implementation of G20 agenda Enhancing the single rulebook Response to market developments MiFID2 / MiFIR

52 Clifford Chance Wide Ranging Changes to Existing Rules Markets rules Market structure Platform trading obligation Pre- and post-trade transparency Transaction reporting Data service providers Algorithmic trading 52 Regional Legal and Regulatory Issues Other changes Third country Extended business conduct Product intervention Governance Commodity derivatives

53 Clifford Chance Structure of the Legislation 53 Regional Legal and Regulatory Issues Recast Markets in Financial Instruments Directive (MiFID2) Scope: instruments, services, exemptions Authorisation, controllers, governance, passporting, branches of third country firms Organisational and conduct of business rules Obligations of MTFs, OTFs, regulated markets Commodity derivatives position limits, management, reporting Data reporting services providers Regulatory powers Reviews, reports Markets in Financial Instruments Regulation (MiFIR) Definitions Pre- and post-trade transparency and waivers Platform trading obligations for shares and OTC derivatives Transaction reporting Clearing of derivatives on regulated markets Access issues Cross-border business by third country firms Product/practices intervention powers ESMA position management powers Delegated/implementing acts (regulations or directives): Drafted and adopted by Commission following advice from ESMA Regulatory/implementing technical standards (regulations): Drafted by ESMA and endorsed by the Commission Level 1 Level 2 National implementation: Primary or secondary legislation, regulatory rules Penalty regimes ESMA guidelines and ESMA/Commission FAQs Level 3

54 Clifford Chance MiFID2/MiFIR: Expected Timeline 54 Regional Legal and Regulatory Issues Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q Publication in Official Journal and in force National transposition deadline New rules begin to apply 24 months 6 months ESMA delivers draft RTS/ITS to Commission 12 months 6 months Notes: Legislation in force 20 days after publication in Official Journal Commission may request ESMA to provide advice on delegated acts in advance of draft RTS/ITS Very limited transitional provisions Market Abuse Regulation (MAR) expected to be published at same time and to apply from 24 months after it comes into force Consultation on national implementation ESMA consults on advice/RTS/ITS

55 Clifford Chance Clients Systems Documentation and compliance Non-EU impact Strategy Implementation Challenges 55 Regional Legal and Regulatory Issues

56 Clifford Chance MiFID2 – Market Structure

57 Clifford Chance Market Structure * “trading venues” 57 Regional Legal and Regulatory Issues Regulated Markets (RMs) Multilateral Trading Facilities (MTFs) Multilateral * Systematic internalisers (SIs) OTC Bilateral MiFID1 Regulated Markets (RMs) Multilateral Trading Facilities (MTFs) Multilateral * Organised Trading Facilities (OTFs) Systematic internalisers (SIs) OTC Bilateral MiFID2 Key changes: New trading venue – OTFs SIs wider in scope Trading pushed on venue or SI Align RM and MTFs

58 Clifford Chance Key Definitions 58 Regional Legal and Regulatory Issues Multilateral RMs and MTFs a multilateral system... which brings together … multiple third-party buying and selling interests in financial instruments – in the system and in accordance with non- discretionary rules – in a way that results in a contract OTFs (new) any system or facility, which is not a regulated market or MTF,... in which multiple third-party buying and selling interests in financial instruments are able to interact in the system in a way that results in a contract Multilateral system any system or facility in which multiple third parties buying and selling trading interests in financial instruments are able to interact Bilateral SIs an investment firm which, on an organised, frequent and systematic basis, deals on own account by executing client orders outside a regulated market or an MTF or an OTF (note likely change to implementing acts) OTC transactions no definition in compromise text

59 Clifford Chance Market Structure Under MiFID2 1. Non-equities only; 2. Publicly available information 59 Regional Legal and Regulatory Issues RMsMTFsOTFs 1 SIsOTC OperatorExchangeExchange or Firm Firm Non-discretion’y execution Yes No Where quotes binding No Conduct of business rules No Yes Operator can use own capital No Yes Access to facilities Transparent, non- discriminatory rules, objective criteria Commercial policy (in objective, non- discriminatory way) Commercial policy Admission to trading Clear, transparent rules (+ other criteria) Transparent rules (+ adequate PAI 2 ) N/A Resilience, circuit breakers, tick size Yes No Surveillance required (MAR) Yes No

60 Clifford Chance Market Structure Under MiFID2 (continued) 1. Non-equities only 60 Regional Legal and Regulatory Issues RMsMTFsOTFs 1 SIsOTC Pre-trade transparency Yes (incl. non- equities) Yes Yes (incl. non- equities) No Pre-trade waiver available Yes (incl. non- equities) YesNoN/a Post trade transparency Yes (incl. non- equities) Yes Yes (incl. non- equities) Publish execut’n quality data Yes No Eligible OTC derivs platform Yes No Authorities can suspend trading Yes Record ordersYes No

61 Clifford Chance Fixed Income and Derivatives Markets Transparency

62 Clifford Chance Liquidity definition (Art 2 (7a) MiFIR) ESMA RTS to calibrate waiver and deferral regimes Key variables Bonds and structured products Emission allowances Derivatives traded on a trading venue Firms, SIs, OTFs, MTFs, RMs. Scope Transparency Rules for Non-equities 62 Regional Legal and Regulatory Issues Pre-trade waivers Post-trade deferral Exemptions

63 Clifford Chance Transparency Rules for Non-equities (continued) (Trading Venues pre-trade) Articles 7 and 8 of MiFIR 63 Regional Legal and Regulatory Issues Obligations (Art. 7) All RMs, MTFs, OTFs to publish bid/offer and depth of trading interest Applies to actionable indications of interest Continuous basis during normal trading hours Give access to publication arrangements on reasonable commercial terms and non- discriminatory basis to firms subject to Art. 17 Waivers (Art. 8) Granted by NCAs following ESMA opinion 1. Orders large in scale relative to normal market size 2. Indications of interest in RFQ and voice trading systems above a specific size that would expose liquidity providers to undue risk 3. Derivatives not subject to trading obligation / other instruments without liquid market. NCA can temporarily suspend the Art. 7 obligation if liquidity drops (3 month rolling period) ESMA RTS to cover variables (size and liquidity thresholds)

64 Clifford Chance Transparency Rules for Non-equities (continued) (Trading Venues post-trade) Articles 9 and 10 of MiFIR 64 Regional Legal and Regulatory Issues Obligation (Art. 9) Publish price, volume and time of trade As close to real-time as reasonably possible Give access to publication arrangements on reasonable commercial terms and non- discriminatory basis to firms subject to Art. 20 Deferral (Art. 10) Granted by NCAs following ESMA opinion 1. Orders large in scale relative to normal market size 2. No liquid market 3. Size of trade would expose liquidity providers to undue risk Limited publication during deferral period / volume omission during extended deferral period possible NCA can temporarily suspend the Art. 9 obligation if liquidity drops (3 month rolling period) ESMA RTS to specify what data to be published and conditions/criteria for deferral

65 Clifford Chance Transparency Rules for Non-equities (continued) (OTC and SIs pre-trade and post-trade) Articles 17 and 20 of MiFIR 65 Regional Legal and Regulatory Issues Pre-trade SIs must publish firm quotes for liquid instruments and make those quotes available to other clients. Undertaking to transact with other clients to whom quote made available where trade below a specified size. SIs can set non-discriminatory limits on number of transactions per quote. No Art. 17 obligation if trade above specified size threshold (Art. 8 threshold) Post-trade SIs must publish volume and price of trades at time concluded via APA Scope and time limits for deferral (and temporary suspension of obligation) analogous to Art. 9 and 10 (deferred publication, limited publication, volume omission, etc.) ESMA RTS will specify disclosable data and application of the obligation in securities financing context

66 Clifford Chance Derivatives Execution and High Frequency Trading

67 Clifford Chance Derivatives – Mandatory Trading Obligation 67 Regional Legal and Regulatory Issues In order to become subject to mandatory trading, derivatives must be: Admitted to trading on at least one relevant trading venue; Sufficiently liquid ESMA to take into account anticipated impact on liquidity of relevant derivatives and commercial activities of end users ESMA also to consider whether derivatives only sufficiently liquid in transactions below a certain size Must be traded only on: Declared subject to mandatory venue trading obligation Regulated market MTFOTF Equivalent third country market OTC derivative subject to the clearing obligation under EMIR Not an intragroup transaction under Article 3 EMIR Not subject to transitional provisions under Article 89 EMIR

68 Clifford Chance Mandatory Trading Process 68 Regional Legal and Regulatory Issues “Bottom up” process Class of OTC derivatives is declared subject to mandatory clearing under EMIR ESMA consults on whether to impose mandatory trading on that class or a subset of that class ESMA proposes draft regulatory technical standards (RTS) to Commission within fixed period after adoption of RTS on clearing under EMIR Mandatory trading may be phased-in for some counterparty types “Top down” process Where a class of OTC derivatives has not been declared subject to mandatory trading ESMA shall regularly monitor activity in those derivatives to identify cases where this may pose systemic risk and to prevent regulatory arbitrage ESMA shall, on its own initiative, identify and notify to the Commission derivatives that should be subject to the trading obligation but which no CCP is authorised to clear under EMIR or which are not admitted to trading.

69 Clifford Chance Derivatives – Mandatory Trading Obligation (2) 69 Regional Legal and Regulatory Issues Must be traded only on: Declared subject to mandatory venue trading obligation Regulated market MTFOTF Equivalent third country market OTC derivative subject to the clearing obligation under EMIR Not an intragroup transaction under Article 3 EMIR Not subject to transitional provisions under Article 89 EMIR Effective equivalent recognition for EU trading venues in relation to derivatives; Commission decision that there are equivalent legally binding requirements: –Authorisation and supervision; –Venue has clear and transparent rules on admission to trading; –Issuers are subject to periodic information requirements; –Market abuse rules Commission decision only for purposes of determining eligibility as a trading venue for these purposes, and may be limited to a category or categories of trading venues.

70 Clifford Chance Who is Subject to Mandatory Trading? Note: Exemption for duplicative or conflicting obligations. Treatment of entities exempt under Article 1(4) or 1(5) EMIR? 70 Regional Legal and Regulatory Issues EUNon-EU FC or NFC+ Third country financial institution or TCE OTC derivative Only if transaction has a direct, substantial and foreseeable effect in the EU or if necessary or appropriate to prevent evasion Where possible and appropriate, ESMA’s technical standards shall be identical to those under EMIR FC = financial counterparty NFC+ = non-financial counterparty over the EMIR clearing threshold TCE = non-EU entity which would have been subject to the trading obligation if established in the EU Third country financial institution = non-EU entity authorised to carry on any of the activities listed in BCD, MiFID 2, Solvency II, UCITS, IORPs, AIFMD

71 Clifford Chance Definition of “algorithmic trading” cross refers to MiFID Market manipulation definition now expressly refers to algorithmic or high frequency trading strategies Interaction with MAR / MAD2 Algorithmic trading High frequency algorithmic trading techniques Direct electronic access (DMA / sponsored access) What is algorithmic trading? Algorithmic Trading 71 Regional Legal and Regulatory Issues Systems and controls, business continuity Notify competent authorities (competent authorities may request further details) Record keeping obligations Liquidity provision obligation where market making Effective systems and controls regarding DMA / sponsored access Obligations on investment firms

72 Clifford Chance Conduct of Business – Third Country Firms

73 Clifford Chance Branch Regime (Articles MiFID2) 73 Regional Legal and Regulatory Issues ■If a branch is required, member states must impose: –criteria for authorisation –Compliance with MiFID conduct of business rules Criteria for authorisation ■Member states may require TCFs to establish branches when providing services to retail or elective professionals ■Alternatively, member states can allow such services to continue to be provided on the basis of existing member state rules Scope ■Some member states may require branches for retail and elective professional services ■Current UK position – preserving the status quo? Practical Impact

74 Clifford Chance Cross-border Regime (Articles MiFIR) 74 Regional Legal and Regulatory Issues ■Registration by ESMA is contingent on equivalence decision ■Reciprocity by third country also required Equivalence ■TCF must register with ESMA to provide services on a cross-border basis ■OR if TCF has established a MiFID2 branch, it can provide services to eligible counterparties and per se professionals across member states on the basis of the rules applicable to that branch (subject to equivalence decision – see below) ■Limited to services to eligible counterparties and per se professionals Registration with ESMA ■Member state rules will continue to apply for three years after an equivalence decision has been reached ■After three years, ESMA-registered TCFs can provide services to eligible counterparties and per se professionals throughout member states on the basis of their home state rules Effect of equivalence decision

75 Clifford Chance APAC OTC Reform status slides [to be included in March set] 75 Regional Legal and Regulatory Issues

76 Clifford Chance Contact 76 Regional Legal and Regulatory Issues Partner Paget Dare Bryan T: E:

77 Worldwide contact information 36* offices in 26 countries * Clifford Chance’s offices include a second office in London at 4 Coleman Street, London EC2R 5JJ. ** Linda Widyati & Partners in association with Clifford Chance. Abu Dhabi Clifford Chance 9th Floor Al Sila Tower Sowwah Square PO Box Abu Dhabi United Arab Emirates Tel +971 (0) Fax +971 (0) Bucharest Clifford Chance Badea Excelsior Center Academiei Street 12th Floor, Sector 1 Bucharest, Romania Tel Fax Hong Kong Clifford Chance 28th Floor Jardine House One Connaught Place Hong Kong Tel Fax Madrid Clifford Chance Paseo de la Castellana Madrid Spain Tel Fax Perth Clifford Chance Level 7, 190 St Georges Terrace Perth, WA 6000 Australia Tel Fax Shanghai Clifford Chance 40th Floor Bund Centre 222 Yan An East Road Shanghai China Tel Fax Amsterdam Clifford Chance Droogbak 1A 1013 GE Amsterdam PO Box AG Amsterdam The Netherlands Tel Fax Casablanca Clifford Chance 169, boulevard Hassan 1er Casablanca Morocco Tel Fax Istanbul Clifford Chance Kanyon Ofis Binasi Kat 10 Büyükdere Cad. No Levent Istanbul Turkey Tel Fax Milan Clifford Chance Piazzetta M.Bossi, Milan Italy Tel Fax Prague Clifford Chance Jungmannova Plaza Jungmannova Prague 1 Czech Republic Tel Fax Singapore Clifford Chance 12 Marina Boulevard 25th Floor Tower 3 Marina Bay Financial Centre Singapore Tel Fax Bangkok Clifford Chance Sindhorn Building Tower 3 21st Floor Wireless Road Pathumwan Bangkok Thailand Tel Fax Doha Clifford Chance QFC Branch Suite B, 30th floor Tornado Tower Al Funduq Street West Bay PO Box Doha State of Qatar Tel Fax Jakarta** Linda Widyati & Partners DBS Bank Tower Ciputra World One 28th Floor Jl. Prof. Dr. Satrio Kav 3-5 Jakarta Indonesia Tel Fax Moscow Clifford Chance Ul. Gasheka Moscow Russian Federation Tel Fax Riyadh Clifford Chance Building 15, The Business Gate King Khaled International Airport Road Cordoba District, Riyadh P.O. Box: 90239, Riyadh 11613, Kingdom of Saudi Arabia Tel Fax Sydney Clifford Chance Level 16 No. 1 O'Connell Street Sydney NSW 2000 Australia Tel Fax Barcelona Clifford Chance Av. Diagonal Barcelona Spain Tel Fax Dubai Clifford Chance Building 6, Level 2 The Gate Precinct Dubai International Financial Centre PO Box 9380 Dubai United Arab Emirates Tel Fax Kyiv Clifford Chance 75 Zhylyanska Street Kyiv Ukraine Tel Fax Munich Clifford Chance Theresienstraße Munich Germany Tel Fax Rome Clifford Chance Via Di Villa Sacchetti, Rome Italy Tel Fax Tokyo Clifford Chance Akasaka Tameike Tower, 7th Floor 17-7 Akasaka 2-Chome Minato-ku, Tokyo Japan Tel Fax Beijing Clifford Chance 33/F, China World Office 1 No. 1 Jianguomenwai Dajie Chaoyang District Beijing China Tel Fax Düsseldorf Clifford Chance Königsallee Düsseldorf Germany Tel Fax London Clifford Chance 10 Upper Bank Street London, E14 5JJ United Kingdom Tel Fax New York Clifford Chance 31 West 52nd Street New York, NY USA Tel Fax São Paulo Clifford Chance Rua Funchal th Floor São Paulo SP Brazil Tel Fax Warsaw Clifford Chance Norway House ul. Lwowska Warszawa Poland Tel Fax Brussels Clifford Chance Avenue Louise 65 Box Brussels Belgium Tel Fax Frankfurt Clifford Chance Mainzer Landstraße Frankfurt am Main Germany Tel Fax Luxembourg Clifford Chance 10 boulevard G.D. Charlotte B.P L-1011 Luxembourg Grand-Duché de Luxembourg Tel Fax Paris Clifford Chance 9 Place Vendôme CS Paris Cedex 01 France Tel Fax Seoul Clifford Chance 21st Floor, Ferrum Tower 19, Eulji-ro 5-gil Jung-gu, Seoul Korea Tel Fax Washington, D.C. Clifford Chance 2001 K Street NW Washington, DC USA Tel Fax

78 Clifford Chance, 28th Floor, Jardine House, One Connaught Place, Hong Kong © Clifford Chance 2013 Clifford Chance HKG v1


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