Alex Sobolev

Senior Associate

London

asobolev@orrick.com

Read full biography at www.orrick.com

Alex Sobolev advises on compliance, risks and strategy for operating business online. His practice focuses on data protection matters, but intersects with consumer law, software development and crypto.

Alex’s multidisciplinary practice and transatlantic experience enable him to provide strategic commercial advice for technology led companies, including coordinating and implementing data and consumer risk mitigation projects, providing outsourcing advice and developing key legal risk mitigation strategies in relation to products where the pace of innovation nearly always outpaces the law.

He has advised companies at all stages of the corporate lifecycle, from software development and product launch, through technology licensing, sale and purchase, to mergers and acquisitions of data and tech-heavy businesses. He has assisted organisations with the design, development and implementation of global data protection and compliance policies, as well the management of risk and security associated with data retention, processing and transfer.

Posts by: Alexei Sobolev

EBA Final Draft RTS on Assessment Methodology for Internal Ratings-Based Approach

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The European Banking Authority (EBA) has published final draft regulatory technical standards (RTS) on the specification of the assessment methodology for competent authorities regarding compliance of an institution with the requirements to use the internal ratings-based (IRB) approach in accordance with Articles 144(2), 173(3) and 180(3)(b) of the Capital Requirements Regulation (Regulation 575/2013) (CRR).

The final draft RTS provide a mapping of the minimum IRB requirements as laid down in Chapter 3, Title II, Part Three of the CRR, into fourteen chapters. Each chapter starts with a brief description of the assessment criteria to be used by competent authorities relating to verification requests and of the methods to be used by competent authorities in this context.  Under the IRB approach, institutions determine their own funds requirements for credit risk, taking into account their own estimates of risk parameters.  Competent authorities may, under the CRR, permit institutions to use the IRB approach, provided that the relevant conditions set out in the CRR are met.

The draft RTS are available here and will now be submitted to the European Commission for endorsement.

ESMA Updates Q&A on Application of UCITS Directive

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The European Securities and Markets Authority (ESMA) has published an updated version of its Q&A paper on the application of the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive (2009/65/EC) as most recently revised by UCITS V (2014/91/EU).  The purpose of the Q&A is to promote common supervisory approaches and practices in the application of the UCITS and its implementing measures.  The most recent updates reflect a Q&A relating to the valuation of OTC derivatives and are highlighted in yellow in the paper.

The latest version of the Q&A is available here.

EBA Publishes Interim Report on MREL

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The European Banking Authority (EBA) has published an interim report on the minimum requirement for own funds and eligible liabilities (MREL). Under the Bank Recovery and Resolution Directive (2014/59/EU) (BRRD) the EBA is required to submit a report to the European Commission on the implementation of MREL by October 31, 2016.  This report will assist the Commission in its work on a legislative proposal on the harmonized application of MREL as well as a legislative proposal to review MREL and implement the total loss absorbing capacity standard in the EU.

The EBA’s interim report is intended to provide input into the Commission’s deliberations ahead of the preparations of the EBA’s final report and contains a number of provisional recommendations. Preliminary quantitative findings on the financing capacity and needs of EU banking groups are also available in the interim report, although these are subject to several methodological caveats.  In the absence of MREL decisions for institutions to date, and given the limited information related to the resolution authorities’ MREL policy approach, the EBA was required to make assumptions on the likely scope and calibration of MREL.  These assumptions are by definition different from the actual levels of MREL which will ultimately be determined by resolution authorities in relation to each institution and group.

The interim report is available here.

ESMA Publishes Responses to its Discussion Paper on UCITS Share Classes

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The European Securities and Markets Authority (“ESMA“) has published the responses received to the Discussion Paper on UCITS share classes.

The UCITS Directive recognizes the possibility for UCITS to offer different share classes to investors but it does not prescribe whether, and to what extent, share classes of a given UCITS can differ from one another. ESMA has identified diverging national practices as to the types of share class that are permitted, ranging from very simple share classes (e.g. with different levels of fees) to much more sophisticated share classes (e.g. which may potentially have different investment strategies).

ESMA published the discussion paper on April 6, 2016. Respondents included the: Alternative Investment Management Association, European Fund and Asset Management Association and The Investment Association.

European Commission Adopts a Delegated Regulation on RTS Relating to Clearing Access in Respect of Trading Venues and Central Counterparties under MiFIR

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The European Commission has adopted a Delegated Regulation and annex supplementing the Markets in Financial Instruments Regulation (Regulation 600/2014) (“MiFIR“) with regard to regulatory technical standards (“RTS“) relating to clearing access in respect of trading venues and central counterparties (C(2016) 3807 final). The European Securities and Markets Authority (“ESMA“) submitted the draft RTS to the Commission in September 2015. The RTS cover transparency, micro-structural issues, data publication and access, requirements applying on and to trading venues, commodity derivatives, market data reporting, post-trading issues and best execution. The Delegated Regulation will now be considered by the Council of the EU and the European Parliament. If neither of them objects, it will enter into force 20 days after its publication in the Official Journal of the EU. The Delegated Regulation will apply from the application date of MiFIR (that is, January 3, 2018) with the exception of Articles 15, 16, 17, 19 and 20, which will apply from the date the Regulation enters into force.

European Commission Adopts Delegated Regulation on RTS Relating to Maintenance of Relevant Data Relating to Orders in Financial Instruments under MiFIR

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On June 24, 2016, the European Commission adopted a Delegated Regulation and annex supplementing the Markets in Financial Instruments Regulation (Regulation 600/2014) (“MiFIR“) with regard to regulatory technical standards (“RTS“) for the maintenance of relevant data relating to orders in financial instruments (C(2016) 3821 final).

The Delegated Regulation will now be considered by the Council of the EU and the European Parliament. If neither of them objects, it will enter into force 20 days after its publication in the Official Journal of the EU. The Delegated Regulation will apply from the application date of MiFIR (that is, January 3, 2018).

ESMA Updates Document on Waivers from MiFID Pre-Trade Transparency Requirements

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On June 20, 2016, the European Securities and Markets Authority (“ESMA“) published an updated version of the waiver document (ESMA/2011/241h) that sets out its assessment of applications for waivers from pre-trade transparency requirements under the Markets in Financial Instruments Directive (2004/39/EC) (“MiFID“).

The waiver document is aimed at competent authorities under MiFID to ensure that, in their supervisory activities, their actions converge with the opinions provided by ESMA. The examples are also intended to provide clarity for firms on the MiFID requirements for pre-trade transparency.

In the updated waiver document there is a new ESMA opinion relating to large-in-scale waivers. The new opinion, which is written in red, provides an example of functionalities that satisfy the MiFID criteria.

ESMA Publishes Opinion on MiFIR II RTS on Ancillary Activities

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ESMA has published an opinion proposing amendments to its draft technical standards (“RTS“) under the MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR) relating to criteria to establish when a non-financial firm’s commodity derivatives trading activity is considered to be ancillary to its main business. The revised draft RTS are set out in an annex to the opinion.

In response to the draft text submitted by ESMA to the European Commission in September 2015, the Commission requested that ESMA include in its RTS a capital-based test for groups that have undertaken significant capital investments in creating infrastructure, transportation or production facilities or groups that undertake activities or investments that cannot be hedged in financial markets.

ESMA maintains that its business activity test was in line with the objectives set out in MiFID II, and a capital based test has significant drawbacks. However, it has identified some metrics for a numerator and denominator that the Commission could use to construct a capital test as an alternative to ESMA’s main business test. In cases where a capital test is introduced, ESMA proposes to allow entities choose between performing the original main business test based on trading activity or a capital test to avoid putting small and medium-sized entities at a disadvantage. Opinion.

European Commission Adopts Implementing Regulation on Risk-Free Rate under Solvency II

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The European Commission has adopted an Implementing Regulation on the risk-free rate under the Solvency II Directive (2009/138/EC). The Implementing Regulation sets out technical information to be used by insurers when calculating technical provisions and basic own funds for reporting with reference dates from March 31 until June 29, 2016. Insurers should use the technical information, which is based on market data related to the end of the last month preceding the first reporting reference date to which the Implementing Regulation applies. EIOPA provided the Commission with the technical information relating to end March 2016 market data in April 2016. That information was published on April 7, 2016 in accordance with Article 77e(1) of Solvency II.

The Implementing Regulation will enter into force on the day after it is published in the Official Journal of the EU (OJ) and shall apply from March 31, 2016.

ESMA Consults on Draft Implementing Measures under the Benchmark Regulation

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ESMA published a consultation paper (ESMA/2016/723) on the technical implementation of the proposed Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (“Benchmark Regulation“).

The proposals in the paper are based on the provisional text of the Benchmark Regulation published by the European Parliament in April 2016. The paper covers the five areas on which the Commission has requested advice, setting out the relevant provisions and their objectives, an explanation of the related policy issues and references to the relevant responses received to the discussion paper: some elements of the definitions, measurement of the use of critical and significant benchmarks, criteria for the identification of critical benchmarks, endorsement of a benchmark or family of benchmarks provided in a third country and transitional provisions. Consultation paper.