Global Trustee and Fiduciary Services Bite-Sized Issue 3 2024

Global Trustee and Fiduciary Services Bite-Sized | Issue 3 | 2024 5 QUICK LINKS AIFMD CYBERSECURITY DIGITALISATION DORA EMIR LIBOR FSB IOSCO MICA MIFID II/MIFIR MONEY MARKET FUNDS OPERATIONAL RESILIENCE SUSTAINABLE FINANCE/ESG ASIA EUROPE IRELAND LUXEMBOURG NORTH AMERICA SWITZERLAND UNITED KINGDOM FSB FSB Chair Letter to G20 Finance Ministers and Central Bank Governors On 20 February 2024, the Financial Stability Board (FSB) published a letter from its Chair, Klaas Knot, to G20 Finance Ministers and Central Bank Governors, ahead of the G20 meeting on 28-29 February. In his letter, Chair Knot warns of the challenging outlook for global financial stability, despite steady economic growth and signs of easing global financial conditions. Debt service challenges could increase, and exposures to sectors facing existing headwinds, like commercial real estate, bear close monitoring. Asset valuations are also stretched in some key markets. Abrupt shifts in market pricing could expose vulnerabilities in the financial system, including those related to leverage and liquidity mismatch in NBFI. The letter lays out the FSB’s work during 2024 tomonitor and address financial systemvulnerabilities. The letter also says that the FSB will work to ensure the effective implementation of the international framework provided by the FSB Key Attributes of Effective Resolution Regimes, address the financial stability risks stemming from leverage in NBFI, and analyse the financial stability implications of tokenisation and artificial intelligence. To address growing financial stability risks from cyber incidents, the FSB is designing a format for incident reporting exchange (FIRE) for public consultation. The FSB will continue to coordinate international work through the FSB Roadmap to address financial risks from climate change, the G20 Roadmap for enhancing cross-border payments and the G20 Roadmap on crypto-assets. At the request of the Brazilian G20 Presidency, the FSB will also deliver a stocktake on regulatory and supervisory initiatives related to the identification and assessment of nature-related financial risks to the G20 July meeting. Link to FSB Chair Letter here IOSCO CPMI-IOSCO Publish Discussion Paper and Call for Comments on Streamlining Variation Margin in Centrally Cleared Markets On 14 February 2024, the BIS Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published the report ‘Streamlining variation margin in centrally cleared markets – examples of effective practices’, which sets out for consultation eight effective practices addressing variation margin (VM) processes and transparency between CCPs, clearing members and their clients. The eight effective practices aim to provide examples of how standards set out in the PFMI and CCP resilience guidance can be met. They are intended to inform CCPs in designing their VM call and collection processes. Among the examples covered are: • Scheduling, frequency and timing of intraday VM calls; • Offsetting VM call requirements against other obligations where possible, • Pass-through of VM by CCPs; • Use of excess collateral to meet VM obligations; and • CCP and clearing member transparency in VM requirements and processes. The Financial Stability Board (FSB) is conducting work to develop high-level, cross-sectoral policy proposals on non-bank market participants’ liquidity preparedness to meet margin and collateral calls. The FSB will publish a consultative report in the first half of 2024. The CPMI and IOSCO invite input on the report by 14 April 2024. Link to Report here