Orrick, Herrington & Sutcliffe

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Contributions by Orrick, Herrington & Sutcliffe

18

An introduction to short selling
Practice notes

Short selling is a technique traders use. They sell securities that they do not own at the time of entering into the agreement to sell. The intention is to make a profit if prices fall. This note introduces the important features of short selling, when legitimate short selling activity can stray into market abuse and how short selling has been cited at the heart of the 2007–2008 financial crisis.

Applying for passporting
Practice notes

This Practice Note introduces the idea of financial services firms being able to use a passport to provide services within the EEA. It explains when this ability to provide services or establish a branch is available to a firm. The note outlines the requirements a UK regulated firm must meet to exercise that right and the process to do so. It also outlines how an EEA firm can exercise passport rights to provide financial services the UK.

Authorised firms and close links
Practice notes

This Practice Note provides an overview of the UK close links regime, including the threshold conditions that authorised firms with close links must satisfy to ensure that they can be effectively supervised by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), and the requirements for firms to keep the FCA and/or PRA informed about their close links on an ongoing basis.

Changing standing data
Practice notes

This Practice Note explores the requirements of chapters 15, 16 and 17 of the Financial Conduct Authority (FCA) Handbook’s Supervision Manual (FCA SUP 15, 16 and 17) in relation to standing data and keeping it up to date. The PRA works closely with the FCA in the collection and management of regulatory data. Much of the regulatory data for PRA firms continues to be collected by the FCA. This includes reporting via the FCA’s GABRIEL system, the submission of firms’ controllers and close links reports and the reporting of changes to firms’ standing data. The Practice Note also outlines the FCA GABRIEL system and the Financial Services Register. The consequences of providing inaccurate information are also addressed. It is very important that the standing data that the FCA and/or PRA hold about firms is accurate and up-to-date. Each authorised firm is responsible for ensuring that it discloses any changes in its standing data to its relevant regulator.

Different types of short selling
Practice notes

Generally, short selling is understood to mean a technique whereby a trader arranges to sell a security that he does not own. The trader aims to make a profit from first short selling a security and, at some point in the future, buying it back at a lower price in order to return it to the original holder. This note provides a description of the different types of short selling that are currently deployed by market participants such as covered and uncovered short selling, short selling in rights issues and restrictions on short selling.

European Insurance and Occupational Pensions Authority (EIOPA)
Practice notes

This Practice Note outlines the role and organisational structure of the European Insurance and Occupational Pensions Authority (EIOPA).

European supra-national bodies—how policy ideas are translated into national legislative initiatives
Practice notes

Financial services law and regulation is predominantly governed by policy and legislation with supra-national origins. This Practice Note explains the legislative process in Europe, where the development and enforcement of rules by supra-national bodies is governed by the Lamfalussy process. It considers the main bodies involved in emerging legislative proposals, with diagrams to show the interaction between them. The process of national implementation of pan-European proposals is also significant and plays a role in the degree of harmonisation achieved for each proposal. Economic conditions since 2007 have highlighted the significance of the co-ordinated legislation, supervisory approaches and enforcement in the financial services sector since regulatory arbitrage and contagion were shown to be severe risks to global stability.

Financial services and judicial review
Practice notes

This Practice Note introduces the concept of judicial review and its relevance to the financial services industry. The Practice Note discusses the implications of the 2013 Court of Appeal decision on the Emptage case, which allowed judicial review for FSCS-related decisions as well as the 2012 case R(C) v Financial Services Authority, in relation to a failure to give clear reasons for a type of enforcement being taken.

General reporting requirements
Practice notes

This Practice Note outlines the wide range of reporting Financial Conduct Authority (FCA) authorised firms are required to undertake in relation to the firm’s financial condition and its compliance with applicable rules and requirements imposed by or under FSMA 2000. This note clearly sign posts the relevant FCA Handbook provisions for occasional and regular reporting requirements for a wide range of matters, such as controllers and suspicious transactions. It touches on practical matters such as how to submit reports, what happens if the wrong information is provided and how to use GABRIEL—the FCA’s online system

The Connect system
Practice notes

This Practice Note introduces the web-based Connect system, when firms must use it and when they cannot. The Practice Note also indicates who should use Connect within a firm and provides other useful information on how firms and principal users within firms can manage the system.

The EU Short Selling regulation
Practice notes

Short selling regulation is an example of regulation that came about in response to the recent financial crisis. This Practice Note outlines the purpose of the Short Selling Regulation (Regulation (EU) 236/2012), disclosure and uncovered positions requirement, exemptions, emergency regulatory powers, ESMA’s technical standards, delegated acts, as well as reaction and implementation points. This Practice Note considers aspects of the Short Selling Regulation that cover credit default swaps. The Short Selling Regulation harmonises how rules and emergency measures may be formulated and when such measures may be invoked. The Short Selling Regulation is binding and directly applicable in all EU Member States.

Upstream Oil and Gas Agreements on the UKCS
Practice notes

This Practice Note summarises some of the key features of the most common commercial agreements (excluding finance agreements and agreements relating to the acquisition and disposal of assets) that may be involved in a typical upstream petroleum production project on the UK Continental Shelf. It was produced in partnership with Orrick.

US: Non-financial foreign entities (NFFEs) and FATCA agreements
Practice notes

This Practice Note examines what a non-financial foreign entity (NFFE) is, what an excepted NFFE is, what foreign financial institutions (FFI) agreements are and what an intergovernmental agreement (IGA) is. A major point of concern that the Internal Revenue Service identified in connection with under-reporting of income by US taxpayers is the use of (non-financial) foreign corporations to hold assets offshore. This Practice Note considers the mechanisms incorporated into the Foreign Account Tax Compliance Act (FATCA) regime to address this concern. It also discusses the various different types of agreement that both FFIs and NFFEs can use to (in the majority of cases) ease the compliance burden imposed by FATCA. This Practice Note is produced in partnership with John Narducci and Stephen C. Lessard of Orrick, Herrington & Sutcliffe LLP.

Other Work
Change in control process—checklist

Part XII of the Financial Services and Markets Act 2000 (FSMA 2000) requires controllers and proposed controllers to seek approval from the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) before acquiring or increasing control in a UK authorised firm, and to notify the relevant regulator when decreasing or ceasing control in a firm. This Checklist sets out the practical steps that controllers and proposed controllers need to consider when acquiring/increasing or disposing/decreasing control.

FSA consultation to clarify its client assets policy

Financial Services analysis: The Financial Services Authority (FSA) has outlined proposals to clarify existing reporting requirements that apply to regulated firms holding client money and assets and to allow more flexibility in the annual stratification process (see Consultation Paper CP12/15). Tony Katz, partner at Orrick Herrington & Sutcliffe (Europe) LLP, looks at some of the pitfalls of the current system.

Solvency II—overview on PRA SS4/13

On 12 December 2013, the PRA issued a Supervisory Statement: 'Solvency II: applying EIOPA's preparatory guidelines to PRA-authorised firms (SS4/13). Orrick, Herrington & Sutcliffe (Europe) LLP, outlines the main provisions of SS4/13'.

UK/EU banking reform—the road to stability?

In this news analysis, Orrick, Herrington & Sutcliffe (Europe) LLP discusses the White Paper which was published on 14 June 2012 around banking reform and the ring-fencing of retail from more risky forms of banking activity, plus increased loss-absorbency provisions. This Practice Note also outlines the UK proposals from Vickers to the Government’s White Paper.

Contributions by Orrick, Herrington & Sutcliffe Experts

13

An Introduction to Oil & Gas Sales and Trading
Practice notes

This Practice Note introduces the sale and trading of crude oil and natural gas, following the production of the same under a Joint Operating Agreement (JOA). Written in partnership with Rebecca Downes (Senior Associate) and Matthew Stott (Managing Associate) at Orrick, Herrington & Sutcliffe (UK) LLP, it covers physical and non-physical (or virtual) sales and trading of crude oil, natural gas and liquefied natural gas (LNG), including a look at key terms and commonly used standard form agreements.

Consumer credit agreements—pre-contract requirements
Practice notes

The Financial Conduct Authority (FCA) has emphasised that one of the main principles underpinning the consumer credit rules is to ensure that consumers are treated fairly. This includes ensuring a customer is provided with full pre-contract disclosure that complies with Chapter 4 of the Consumer Credit Sourcebook (CONC).This Practice Note examines pre-contract disclosure in consumer credit agreements, under the requirements of the Consumer Credit (Disclosure of Information) Regulations 2010 (SI 2010/1013) (amended by the Consumer Credit (Amendment) Regulations 2010 (SI 2010/1969) (the Disclosure Regulations) which implement the requirements of the Consumer Credit Directive (CCD) into UK law together with regulatory requirements encapsulated in Chapter 4 of the Financial Conduct Authority Sourcebook on Consumer Credit (CONC 4).

Consumer credit: rules relating to arrears, default and recovery
Practice notes

Firms carrying on a consumer credit-related activity must comply with the Financial Conduct Authority’s (FCA) Consumer Credit Sourcebook (CONC). Chapter 7 of CONC contains the relevant rules and guidance on arrears, default and recovery (including repossession). These rules set out the requirements with which lenders must comply in relation to how their businesses collect debts and manage borrowers in arrears and forbearance, including how they communicate and how they propose to assist borrowers in difficulty.

Consumer credit—loans to employees and directors and employee share schemes
Practice notes

This practice note examines the circumstances under which loans to employees may fall within the scope of the UK consumer credit regime; employee share schemes and the exemptions available; the implications for a firm if its arrangements fall within the scope of the UK consumer credit regime and are not exempt.

Exempt consumer credit agreements under the FSMA 2000 (Regulated Activities) Order 2001
Practice notes

This Practice Note seeks to explain the types of agreements which will be exempt agreements under the FCA consumer credit regimes. Entering into these exempt agreements will exempt a lender from carrying out the activity of entering into a regulated credit agreement as lender. Some other regulated activities relating to consumer credit agreements may also be exempt if relating to these types of agreements. However, these are dealt with separately in other Practice Notes.

FCA authorisation rules relating to consumer credit firms
Practice notes

This Practice Note will provide an overview of the authorisation regime for consumer credit firms. It will also include details of the difference between the authorisation regime and the interim permission regime for consumer credit firms; the limited permission regime; threshold conditions; regulatory reporting requirements for consumer credit firms and an introduction on how firms should prepare for authorisation.

Operating an electronic system in relation to consumer lending
Practice notes

This Practice Note examines the regulated activity operating an electronic system in relation to consumer lending, including, the main elements of operating an electronic system in relation to lending, the meaning of business purpose when operating an electronic system, the relation to peer-to-peer lending and the rules applicable to firms authorised to operate an electronic system in relation to lending.

Passporting and consumer credit
Practice notes

This Practice Note examines the procedures firms authorised in other EEA Member States may be permitted to use in order to provide certain consumer credit services within the UK through by either exercising rights under CRD IV or MiFID II, exercising treaty rights under FSMA 2000, Sch 4, or providing services entirely at a distance by electronic means from an EEA Member State under the E-Commerce Directive.

Regulated activities for debt management firms and not-for-profit bodies
Practice notes

This Practice Note details the debt related regulated activities including debt adjusting, debt counselling, debt collecting and debt administration.

Regulated activities relating to the provision of credit information services and credit references
Practice notes

This Practice Note provides an overview of the regulated activities of providing credit information services and providing credit references under the Financial Services and Markets Act 2000 (FSMA 2000) and articles 89A and 89B of the Financial Services and Markets Act (Regulated Activities) Order 2001(RAO). It examines what constitutes these regulated activities and the consequences of failing to obtain authorisation to undertake such an activity.

Regulated activities—credit broker
Practice notes

This Practice Note provides an overview of the main elements of the regulated activity of credit broking under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544 and Financial Conduct Authority’s consumer credit regime.

Responsible lending requirements—CONC 5
Practice notes

This Practice Note looks at the Financial Conduct Authority’s (FCA) Consumer Credit Sourcebook (CONC) chapter 5 (CONC 5) concerning rules and guidance on responsible lending requirements, including the requirement to conduct a creditworthiness assessment before entering into an agreement, conduct of business in relation to credit brokering and P2P agreements and conduct of business in relation to affordability and creditworthiness.

Restrictions on varying or modifying consumer credit agreements
Practice notes

This practice note examines the restrictions placed upon authorised firms when varying consumer credit agreements. It will discuss the restrictions on varying consumer credit agreements, how can a party to a regulated agreement vary the agreement at its own discretion (unilateral), the relevant rules relating to modifying agreements, pre-contractual requirements and modifying agreement, and the practical issues do firms need to consider.

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