Global Trustee and Fiduciary Services Bite-Sized Issue 11 2024

12 QUICK LINKS CULTURE CRYPTOASSETS ELTIFS EMIR FINANCIAL STABILITY BOARD FINTECH MIFID II/MIFIR OPERATIONAL RESILIENCE SUSTAINABILITY T+1 ASIA/PACIFIC EUROPE LUXEMBOURG NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 11 | 2024 SFCWelcomes Voluntary Code of Conduct for ESG Ratings and Data Products Providers On 3 October 2024, the Securities and Futures Commission (SFC) stated that it welcomed the publication of a voluntary code of conduct ( VCoC) by an industry-led working group for ESG ratings and data products providers providing products and services in Hong Kong. The SFC says that the VCoC was finalised after a one-month consultation which ended in June 2024, and was modelled on international best practices recommended by the International Organization of Securities Commissions. The SFC says that this approach ensures that the VCoC is interoperable and consistent with the expectations introduced in other major jurisdictions. The VCoC is available in English and Chinese. The SFC states that ESG ratings and data products providers who signed up to the VCoC will be expected to make available publicly a self-attestation document, which explains their approach and actions taken to adhere to the principles of the VCoC. The SFC says that the self-attestation documents will also be made available on the VCoC website. The SFC adds that the information set out in the documents will facilitate the due diligence and on-going assessments of ESG products and providers used by end users, such as SFC-licensed asset managers, in their investment and risk management processes. Link to Voluntary Code of Conduct here T+1 ESMA, ECB and EC Announce Next Steps for the Transition to T+1 Governance On 15 October 2024, the European Securities and Markets Authority (ESMA), the European Commission and the European Central Bank announced in a joint statement the next steps to support the preparations towards a transition to T+1. ESMA will deliver its report to the Council and the European Parliament in the coming months, but says its preliminary findings are clear: • First, shortening the settlement cycle in the EU will change the way in which markets function, with impacts depending on the type of stakeholder, the category of transaction and the type of financial instrument. • Second, quantifying some of the costs and benefits related to the shortening of the settlement cycle in the EU is challenging, but the elements assessed by ESMA to date suggest that the impacts of T+1 in terms of risk reduction, margin savings and the reduction of costs linked to the misalignment with other major jurisdictions globally, bring along important benefits for the EU Savings and Investments Union (SIU). • Third, harmonisation, standardisation and modernisation will be needed and will require investments. The improved efficiency and resilience of post-trade processes that would be prompted by a potential move to T+1 would facilitate achieving the objective of further promoting settlement efficiency in the EU. The Joint Statement says that due to the need for an efficient and competitive EU SIU, as well as of the challenges of a shift to T+1 in the complex EU post-trade landscape, it is urgent to act if the EU wants to avoid prolonging and amplifying the negative impacts of the misalignment with major jurisdictions internationally. Given the high level of interconnectedness between the EU capital markets and those in other jurisdictions in Europe, a coordinated approach across Europe is desirable, with efforts to reach consensus on the timing of any move to T+1. In the Joint Statement, it says that experience in other jurisdictions has shown that close cooperation between regulators and the financial industry is of the utmost importance to facilitate the transition to T+1. ESMA, in close coordination with national competent authorities, DG FISMA and the ECB’s DGMIP have therefore agreed to establish a governance structure, incorporating the EU financial industry, as soon as possible to oversee and support the technical preparations of any future move to T+1.