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

Delegated Regulation under MAR Covering Indicators of Market Manipulation, Disclosure Thresholds, Trading During Closed Periods and Notifiable Managers’ Transactions

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The European Commission’s Delegated Regulation supplementing the Market Abuse Regulation (Regulation 596/2014) (MAR) as regards an exemption for certain third countries’ public bodies and central banks, the indicators of market manipulation, the disclosure thresholds, the competent authority for notifications of delays, the permission for trading during closed periods and types of notifiable managers’ transactions, was published in the Official Journal of the EU on 5 April 2016.

The Delegated Regulation specifies:

  • The public bodies and central banks of third countries benefitting from the exemption under Article 6(1) of MAR.
  • The indicators of market manipulation set out in Annex I of MAR.
  • The minimum thresholds for the exemption of certain participants in the emission allowance market from the requirement to publicly disclose inside information.
  • The competent authority that should be notified concerning delays in the public disclosure of inside information.
  • The circumstances under which trading in a closed period may be permitted by an issuer.
  • The types of transactions that would trigger the notification requirement under Article 19 of MAR.

The Delegated Regulation enters into force on April 24, 2016 and will apply from July 3, 2016.

Joint Committee of ESAs Final RTS on Key Information Documents for PRIIPs

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The Joint Committee of the European Supervisory Authorities (ESAs) published its final draft regulatory technical standards (RTS) on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs). The draft RTS include a mandatory template, which includes certain mandatory texts and details of the layout to use, a methodology for the assignment of each PRIIP to one of the seven classes in the summary risk indicator, and the requirements relating to the presentation of costs.

An accompanying press release states that the proposed KIDs provide retail investors, for the first time across the EU, with simple and comparable information on PRIIPs. It is intended that the three page document will increase the transparency and comparability of information about the risks, performance and costs of PRIIPs.

The draft RTS have been submitted to the European Commission for endorsement and will enter into force on December 31, 2016.

ESMA Publishes New Q&A on CFDs and Other Speculative Products

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The European Securities and Markets Authority (ESMA) has published a new question and answer document (ESMA/2016/590) on the application of MiFID to the marketing and sale of financial contracts for difference (CFDs) and other speculative products to retail clients.

ESMA explains that, although CFDs and other speculative products (such as binary options and rolling spot forex) are complex products, they are widely advertised to the retail mass market by a number of firms, often through online platforms. The Q&A document is designed to promote common supervisory approaches and practices in the application of MiFID and its implementing measures to key aspects that are relevant when CFDs and other speculative products are sold to retail clients. Although they are targeted at competent authorities, the answers are also intended to help firms by providing clarity on MiFID requirements.

ESMA has also added that, while the Q&A refer to MiFID, the principles and requirements underpinning the content of the document will remain unchanged once MiFID II enters into application.

European Commission Adopts Delegated Directive Supplementing MiFID II

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On April 7, 2016, the European Commission adopted a Delegated Directive supplementing MiFID II regarding the safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision of reception of fees, commissions or any monetary or non-monetary benefits (i.e. inducements).

The aim of the draft Delegated Directive is to specify further the following MiFID II rules and details for their implementation:

  • The safeguarding of clients’ financial instruments and funds;
  • Product governance obligations for investment firms manufacturing or distributing financial instruments (or both);
  • The provision or reception of inducements.

The draft Delegated Directive is based on the final technical advice on MiFID II and MiFIR provided to the Commission by ESMA in December 2014. The Council of the EU and the European Parliament will now consider the Delegated Directive. If neither of them object, it will enter into force twenty days after publication in the Official Journal.

European Commission Adopts Delegated Regulation on Presentation of Investment Recommendations and Disclosure of Conflict of Interest Under MAR

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The European Commission has adopted a Delegated Regulation supplementing the Market Abuse Regulation (“MAR“) with regard to regulatory technical standards for the technical arrangements for the objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflict of interest (under Article 20).

The Delegated Regulation provides for rules on the identity of producers of recommendation; introduces a general standard on objective presentation of recommendations, applicable to any person mentioned in Article 20(1); sets out requirements on the maintenance of records of all recommendations produced on any issuer or financial instrument and disseminated during the preceding 12-month period and determines the general standards and additional obligations relating to disclosure of interests or of conflicts of interest. It also ensures that recommendations include the date and time on which the recommendation was first disseminated and provides for specific arrangements for dissemination of recommendations, their summary or extract and when recommendations are substantially altered.

Once approved by the Council of the EU and the European Parliament, it is expected that the Delegated Regulation will apply from July 3, 2016. The Delegated Regulation can be found here.

ESAs Publish Final Draft Technical Standards on Margin Requirements for Non-Centrally Cleared Derivatives

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The Joint Committee of the European Supervisory Authorities (EBA, EIOPA, ESMA) (“ESAs“) has published final draft Regulatory Technical Standards (“RTS“) outlining the framework of the European Market Infrastructure Regulation (EMIR). The RTS cover the risk mitigation techniques related to the exchange of collateral to cover exposures arising from non-centrally cleared OTC derivatives. They also specify the criteria concerning intragroup exemptions and the definitions of practical and legal impediments to the prompt transfer of funds between counterparties.

The draft RTS prescribe that, for OTC derivatives not cleared by a Central Counterparty, counterparties have to exchange both initial and variation margins. This will reduce counterparty credit risk, mitigate any potential systemic risk and ensure alignment with international standards. The draft RTS outline the list of eligible collateral for the exchange of margins, the criteria to ensure the collateral is sufficiently diversified and not subject to wrong-way risk, as well as the methods to determine appropriate collateral haircuts. The draft RTS also lay down the operational procedures relating to documentation, legal assessments of the enforceability of the agreements and the timing of the collateral exchange, as well as the procedures for counterparties and competent authorities related to the treatment of intragroup derivative contracts.

EBA Publishes Amended Standards on Supervisory Reporting for Institutions

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The European Banking Authority (“EBA“) has published its final draft Implementing Technical Standards (“ITS“) amending the Commission’s Implementing Regulation (EU) No. 680/2014 on supervisory reporting. The EBA is required to develop ITS specifying supervisory reporting in the areas of own funds, financial information, losses stemming from lending collateralized by immovable property, large exposures, leverage ratio, liquidity ratios, asset encumbrance, additional liquidity monitoring metrics and supervisory benchmarking.

The final ITS include minor changes to templates and instructions which reflect some of the answers published in the EBA’s Single Rulebook Q&A, align with disclosure requirements for capital buffers and correct legal references and other clerical errors. The amendments are expected to be applicable for reporting from December 2016.

Bank Recovery and Resolution Directive; Exceptions to “Bail-In” of Liabilities

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On February 4, 2016, the European Commission adopted a Delegated Regulation (C(2016) 379) which (taking into account advice given by the European Banking Authority in March 2015) specifies where exclusion from the application of write-down or conversion powers is allowed under Article 44(3) of the Bank Recovery and Resolution Directive (2014/59/EU) (BRRD).

The BRRD’s bail-in tool gives a resolution authority the power to bail in all the liabilities of a firm in resolution, subject to exclusions specified in Article 44 of the BRRD. In exceptional circumstances, Article 44(3) permits the resolution authority to exclude certain liabilities from the scope of the bail-in tool, if certain conditions are met. The Commission has the power under Article 44(11) to adopt a delegated act specifying the circumstances in which exclusions from the bail-in tool are necessary under Article 44(3).

The Delegated Regulation:

  • Lays down common rules to be applied whenever a resolution authority considers excluding a liability from the application of the bail-in tool under Article 44(3).
  • Clarifies when a liability can be excluded from bail-in based on the impossibility of bailing-in that liability within a reasonable timeframe.
  • Lays down the elements to determine the reasonable time after which a liability can be excluded from bail-in.
  • Clarifies when a liability can be excluded from bail-in based on the need to preserve certain critical functions and core business lines, to avoid widespread contagion or to avoid value destruction.

The Council of the EU and the European Parliament are now considering the Delegated Regulation. If neither of them objects to it, the Delegated Regulation will enter into force 20 days after its publication in the Official Journal of the EU.

EBA Publishes Final Report on Guidelines on Co-operation Agreements Between DGSs Under Recast DGSD

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The European Banking Authority (“EBA“) has published a final report on guidelines on cooperation agreements between deposit guarantee schemes (“DGSs“). The guidelines have been developed to promote a common and consistent approach to co-operation agreements between DGSs throughout the EU, as provided under the recast Deposit Guaran-tee Schemes Directive (“DGSD“).

To promote a consistent approach and facilitate entry into co-operation agreements between DGSs across the EU, the guidelines specify the objectives and minimum content of co-operation agreements, and provide further guidance on the sequence and timing of events when the local DGS performs a pay-out of depositors on behalf of the DGS in another member states. The guidelines also include a multilateral framework co-operation agreement to which the DGSs or, where relevant, the designated authorities should adhere, although they allow DGSs or designated authorities to enter into bilateral or multilateral agreements where it is intended that co-operation agreements will go beyond the level of detail required by the guidelines.

European Commission Publishes Secondary Implementing Decision on Third Country Equivalence for Purposes of Treatment of Exposures under CRR

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A European Commission Implementing Decision on the lists of third countries considered equivalent for the purposes of the treatment of exposures under the Capital Requirements Regulation (“CRR“) has been published in the Official Journal of the EU on February 18.

Under the CRR, certain categories of exposures to entities located in third countries can benefit from more favourable prudential treatment if the Commission has determined that a third country’s prudential supervisory and regulatory requirements are at least equivalent to those applied in the EU for the purposes of the treatment of exposures under the CRR. The latest Implementing Decision adds Australia, Hong Kong, Indonesia, Japan and South Korea to the list of third countries.

The Implementing Decision will enter into force on March 9.