ON THE RADAR: Regulations affecting data management Jacob Gertel, Senior Project Manager Legal & Compliance SIX Financial Information

Today’s focus: laws, regulations & directives relevant for you

UCITS PIP / PRIP EUSD SNB-Reporting Taxable Securities PEP-Check Final

Withholding Tax

UK-Tax French Tax Regulations

Germany Tax reporting FinGrep

Danish tax types for

investment trusts

Belgium withholding tax

Japan restriction on

foreign ownership

Canada Tax saving plans

SEC Rule 22-C-2 IRS Reporting US various reg. OECD Reputation Risk

Data Solvency II

FATCA MiFID AIFMD FTT LEI

2000 2005 2010 2015

SNAPSHOT

Regulations keep evolving and mounting up over time

MiFID I MiFID II

US Withholding Tax FATCA

AIFMD French & Italian FTT

Final Withholding Tax (UK / AT)

FTT

Solvency II

LEI

DESCRIPTION AND FOCUS

MiFID / FIDLEG

• Stringent consumer protection rules • Continuous monitoring of − Risk level of the client portfolio − Match to risk appetite − Product suitability

CLIENT IMPLICATIONS • Higher value services, offering fact-based advice • Always respect the pre-defined risk tolerance/appetite • Clients being active in investment decisions expect: − A risk “safety net” from the bank − Risk advice from the advisor

• Pro-active risk management and advice in time of crisis

TIMELINE

• MiFID II into national law in 2016 (planned)

• FIDLEG in consultation

AFFECTED CLIENTS / USERS • Wealth managers

• Private bankers

• Other banks that put focus on wealth management

OUR SERVICE

Sophisticated portfolio risk assessment with ImpaQt

• Achieve regulatory compliance (MiFID / FIDLEG) • Risk models, all required data delivered as service • Empower the advisors to perform on-going risk

monitoring • Ensure investment suitability and proper

documentation for clients

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DESCRIPTION AND FOCUS Alternative Investment Fund Managers Directive (AIFMD)

• EU Directive issued by the ESMA (European Securities and Markets Authority)

• Goal is to ensure transparency of non-UCITS funds by providing EU ‘passport’ for fund managers and funds after registration with an EU regulator

• Impact EU and non-EU funds – FINMA has cooperative agreement with the EU is the areas of exchange of information and supervision

CLIENT IMPLICATIONS

• Flagging of AIFMD compliant funds • Instrument classification based on the ESMA directives

for proper fund registration and reporting obligations

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TIMELINE

• Registration to be completed until 22 July 2014 (registration open since 24 Feb 2014)

AFFECTED CLIENTS / USERS • Fund management companies and

fund managers

• Asset managers and fund custodians

OUR SERVICE

Ongoing instrument classification and KIIDS

• Issuer Level – flagging the issuers having the EU Passport based on the information published by ESMA

• Instrument Level – categorization of the instruments according to Annex VII (Table of enumerated reporting fields values) of AIFMD.

• KIIDs (similar to PIB/PRIIPs) explain financial products to investors in a clear and simple manner

• Includes risk and opportunities, and allows to compare alternative investment products more easily

REFERENCE DATA CLASSIFICATION

KIIDs

DESCRIPTION AND FOCUS

Financial Transaction Tax (FTT)

• The Financial Transaction Tax is a tax on financial transactions.

• The EU intends to implement the tax in the following 11 countries: - Austria, Belgium, France, Germany, Greece, Italy,

Portugal, Slovakia, Slovenia, Spain and Estonia • The planned tax might affect financial transactions

related to equities, derivatives and HFT with different tax rates.

• The EU is working on the directives and intends to publish them in 2014.

CLIENT IMPLICATIONS • Identify, withhold and report of the financial

instruments eligible for the FTT

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TIMELINE

• France introduced it on 1.8.2012 • Italy as of 1.3.2013 • Rest EU in 2016 (TBC)

AFFECTED CLIENTS / USERS • All financial institutions worldwide

OUR SERVICE

Detailed tax classification and rate

SIX will populate the data on VDF Tax / Reporting message FSD

Country: Italy (525) Current Taxes Withholding tax (14) Liable/ applicable (1) Dividend (3) 01.01.2012 --- Tax resident (2): 20 % (4)

Financial transaction tax (high frequency trading) (55)

Liable/ applicable (1) Transaction (4) 01.03.2013 --- Applies to all (3): 0.02 % (4)

Financial transaction tax (generally applicable) (51)

Liable/ applicable (1) Transaction (4) 01.01.2014 --- Applies to all (3): 0.2 % (4)

Financial transaction tax (regulated market or MTF) (53)

Liable/ applicable (1) Transaction (4) 01.01.2014 --- Applies to all (3): 0.1 % (4)

EXAMPLE: Italian FTT - Valor: 928195 A2A SpA

DESCRIPTION AND FOCUS

Legal Entity Identifier (LEI) and other Identifiers • G-20 committed to mitigate systematic risk within financial

markets and to provide more transparency to the OTC market. • LEI is a 20 digit alphanumeric code that is designed to uniquely

identify a legal entity that engages in a financial transaction • LEI is supported by an ISO standard (ISO 17442) and within

scope are legal entities, subsidiaries and fund structures • Central Operating Unit (COU) will be the principal operational

arm of the global LEI system. • Local implementation will be conducted through Local

Operating Units (LOUs)

CLIENT IMPLICATIONS • Usage of the LEI is mandatory for regulatory reporting under

Dodd–Frank and EMIR to identify counterparties

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TIMELINE

• April 2014: 13 pre-LOUs have endorsed status

AFFECTED CLIENTS / USERS • Any financial institution that trades

in OTC Derivatives and/or ET Derivatives either for themselves or on behalf of their clients

• Any financial institution that is required to be compliant with the following regulations: Dodd-Frank, EMIR, HKMA (Hong Kong), Monetary Authority of Singapore, AIFMD, MiFID II/MiFIR, Solvency II, COREP (Common Reporting)

OUR SERVICE

Enriched LEI linked to other identifiers and reference data

• Provides the solution to the challenge of integrating pre-LEI/LEI into your entity master

• Comprehensive LEI mapping providing a pass through into existing client services

• Solves the problem of manual mapping Pre-LEI/LEIs from multiple LOUs

• Automatically updated in the database when changes occur due to corporate actions

• LEI mapped to GK institution code at entity level

Thank you for your time. Jacob Gertel, Senior Project Manager Legal & Compliance SIX Financial Information