Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
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1. CC provides competition for A&O’s OTC derivatives regulation tool
Clifford Chance (CC) have announced a new tool developed with Thomson Reuters that supports their bank clients with new regulatory requirements for over-the-counter (OTC) derivatives transactions.
The solution will allow financial institutions to meet regulatory obligations for complex, multi-jurisdictional contract work concerning uncleared OTC derivatives. It has been created specifically in line with new margin requirements, which are expected to put further cost pressures on financial institutions.
The tech compares to MarginMatrix, a tool developed by Allen & Overy (A&O) and Deloitte, announced in June, which helps bank deals with similar regulatory challenges brought about by the European Markets Infrastructure Regulation (EMIR).
The collaboration between A&O and Deloitte was fairly ground-breaking and combined impressive legal expertise and managed services. The most recent tie-up with CC and Thomson Reuters has followed suit, pairing up a similarly impressive regulatory offering with a leading provider of information and software solutions.
Thomson Reuters has applied its contract automation software Contract Express to the tool which enables it to generate regulatory compliant documentation that as well provide greater economies of scale by producing more contracts at a much quicker rate.
CC describes how the new flexible service has come about as a result of client responses. Paget Dare Bryan is a banking partner at the magic circle firm and said: “Clients didn’t all want a one-sized package; they wanted to be able to disentangle what they wanted from it, from templates to teams of people – they might be able to run some aspects of it themselves. They are going to use us and Thomson Reuters in a way that fits in with their pricing model.”
This flexibility has been welcomed by clients and signals an understanding from law firms that the delivery of legal services must best suit their clients’ needs, which can often be met by the innovative solutions from businesses such as Thomson Reuters and Deloitte.
2. FCA revisits the Senior Manager’s Regime
Six months after the introduction of the Senior Managers and Certification Regime (SMCR), responsibility for the conduct and culture of financial services firms continues to be obscured, argued new chief executive of the Financial Conduct Authority Andrew Bailey.
Despite firms making a “substantial effort to get this right,” in his first opinion piece since taking up the role three months ago, Bailey highlights evidence of overlapping and unclear allocation of responsibilities under the SMCR and even cases of firms sharing responsibility amongst more junior members of staff to obscure who is genuinely accountable.
“This goes against the intention of the senior managers and certification regime and should not continue,” he said.
Introduced as part of the UK’s financial regulatory framework in March, the SMCR ensures greater accountability for individual actions by more clearly defining the roles and responsibilities of those in senior functions. While it currently applies just to lenders and insurers, the rules will be extended across the financial sector — including asset managers and hedge funds — by 2018.
The banking industry is particularly cautious about the new regime as the FCA have predicted it will bring about a greater amount of enforcement action against individuals.
Bailey made public his comments on the application of the regime, ahead of the FCA’s announcement that it has published feedback on the implementation process over the last six months and proposed measures to further reinforce the importance of the regime, particularly at the most senior levels.
The proposed amendments also dictate that those with poor conduct records may find harder to find new work if they’re looking to move as employers may not be as able to provide references. Moreover, the changes will also affect their remuneration as bonuses transferred to new employers for a regulated senior manager can be forfeited or taken back by the former employer.
Since its inception, there has also been a lack of clarity over how the SMCR affects in-house legal functions. It has been highlighted by the Law Society of England and Wales that lawyers, if included in the SMCR, will struggle to provide honest legal advice to their employees, which would indicate a conflict of interest. ‘In some circumstances general counsel may, by virtue of being included in the Senior Managers Regime, feel obliged to disclose legally privileged information,’ the Law Society said. The FCA have therefore launched a discussion paper to explore this challenge further and explain better how legal functions should be treated under the regime.
Senior management re-elected for another three-year term at Charles Russell Speechlys
Both managing partner James Carter and senior partner Christopher Page ran unopposed in Charles Russell Speechlys’ management team elections
Clydes senior partner steps down
Senior partner at Clyde & Co James Burns will be stepping down and taking on a new role as head of the Americas. The firm are to appoint a new senior partner next month
HSF loses Middle East rainmaker to Jones Day
Nadim Khan exits his post as Middle East finance head for Herbert Smith Freehills to join Jones Day and serve as their head of Middle East banking and finance practice
Osborne Clarke makes two City corporate hires
Former head of corporate Edward Persse and fellow corporate partner Paul Smith both depart Irwin Mitchell to join the London corporate team at Osborne Clarke
Ashurst retains banking partner
Banking partner Nigel Ward remains a partner at Ashurst after it was announced he would be leaving for Paul Hastings
Olswang loses life sciences co-head to magic circle firm
Stephen Reese, IP partner and co-head of life sciences, departs from Olswang to join Clifford Chance in London
Quinn bolsters City FS offering
Quinn Emanuel Urquhart & Sullivan have taken on Macfarlanes’ financial services head David Berman, who will sit in their white collar and investigations practice
Covington hires ex BG GC
BG Group former general counsel Graham Vinter will be returning to private practice, joining Covington & Burling’s London project finance offering
Office Openings & Closings
EY Law loses international law capability in Singapore
EY Law’s network firm in Singapore DA Partners has shut down, leaving the firm without an international offering, with only a domestic law offering in the country with local practice PK Wong
Cadwalader shuts down in China
Cadwalader Wickersham & Taft announces office closures in Beijing and Hong Kong
Mergers & Alliances