Global Trustee and Fiduciary Services Bite-Sized Issue 1 2024

Global Trustee and Fiduciary Services Bite-Sized | Issue 1 | 2024 8 QUICK LINKS BENCHMARKS REGULATION CSDR CYBERSECURITY DEFI DIGITALISATION DORA ELTIF FSB FUND LIQUIDITY MONEYMARKET FUNDS OPERATIONAL RESILIENCE SUSTAINABLE FINANCE/ESG ASIA EUROPE IRELAND NORTH AMERICA UNITED KINGDOM In calibrating the new risk parameters ESMA has worked closely with the European Systemic Risk Board and the European Central Bank. Next steps The new 2023 parameters set out in the updated Guidelines and the revised methodology will have to be used for the purpose of the first reporting period following the start of the application of the updated Guidelines, two months after the publication of the Guidelines translated into official EU languages. Link to the Final Report here Updating the Regime for Money Market Funds On 6 December 2023, the UK’s Financial Conduct Authority (FCA) published a consultation paper (CP23/28) setting out its proposals aimed at enhancing the resilience of Money Market Funds (MMF) based in the UK. The FCA is proposing two changes to the current MMF regulation that it has assessed as particularly important in reducing the vulnerability of MMFs. Both aim to increase the usable liquidity of MMFs, so that in severe but plausible market stresses, MMFs do not reach a point at which they are unable to meet continuing investor demands for their money back without fire-selling assets. 1. A significant increase in the minimum proportion of highly liquid assets that all MMF types have to hold. This will ensure that MMFs have enough liquid assets to withstand large amounts of withdrawals over a short period in severe but plausible market stresses. This will significantly reduce the first-mover advantage. 2. The removal of an existing regulatory requirement for important types of MMF which ‘links’ the levels of liquid assets in those MMFs with the need for the MMF manager to impose or consider imposing tools that, if used, would reduce the ability of investors to get their money back without unanticipated delays or losses. This proposed policy change is known as ‘delinking’ and works to reduce the additional first-mover advantage the ‘links’ can cause for these types of MMF as their liquid asset levels decrease. The FCA is proposing a series of further changes that aims to further enhance MMF resilience, as set out in the CP. Overall, the proposals aim to prioritise strengthening the existing regulatory regime for MMFs while maintaining the broad current MMF operating model. The consultation period ends on 8 March 2024. Smarter Regulatory Framework (SRF) The FCA is also consulting to bring MMF rules that are currently contained in retained EU law into the Handbook. As a result, the FCA proposes to create a newMMF sourcebook that will operate alongside COLL and FUND. To enable the transfer of the rules to the new sourcebook, HM Treasury published a draft statutory instrument (SI) alongside an accompanying explanatory policy note, explaining the UK Government’s approach to establishing a new legislative framework for MMFs, and will facilitate the delivery of new FCA rules to replace detailed requirements for MMFs. The UK Government requests that any technical comments on the draft SI are submitted by 24 January 2024. Link to CP23/28 here Link to the Draft SI here