Global Trustee and Fiduciary Services Bite-Sized Issue 4 2024

Global Trustee and Fiduciary Services Bite-Sized | Issue 4 | 2024 15 QUICK LINKS AIFMD BENCHMARK REGULATION CBDC COSTS & CHARGES CRYPTOASSETS CYBERSECURITY DIVERSITY & INCLUSION FINTECH IFD/IFR LIBOR TRANSITION MIFID II/MIFIR OPERATIONAL RESILIENCE PRIIPS RETAIL INVESTMENT STRATEGY SETTLEMENT SUSTAINABLE FINANCE/ESG UCITS ASIA LUXEMBOURG NORTH AMERICA UNITED KINGDOM • That the UK and other European jurisdictions should collaborate closely to see if a coordinated move to T+1 is possible, and if other European jurisdictions commit to a transition date, then the UK should consider whether it wishes to align with that timeline. • That a Technical Group of industry experts should be set up to determine the technical and operational changes necessary for the transition to T+1 happen and how these should be implemented. This group should select a date in 2025 for these changes to be mandated, and a date before the end of 2027 for the UK transition to T+1. In responding to the report, the UK government stated that it has accepted all the recommendations. In particular the UK government agrees that the UK should move to T+1, that this should be achieved no later than the end of 2027, and that the UK should work with other European jurisdictions, in particular the EU and Switzerland, to coordinate a simultaneous move to T+1 if possible. Finally, and in line with the report, the UK government established a Technical Group to take forward the implementation of the UK move to T+1. The group will develop the technical and operational changes necessary for the UK to transition to T+1, and to set out how these should be implemented. The group will also determine the appropriate timing for mandating these changes, which should be a date in 2025, and the overall ‘go-live’ date for T+1. A Terms of Reference for the group was also published. Link to the Report here Link to the UK Government Response here Link to the Technical Group ToR here SEC: Shortening the Securities Transaction Settlement Cycle On 27 March 2024, the US Securities and Exchange Commission (SEC) Division of Examinations published a risk alert relating to the US transition from T+2 settlement to T+1 on 28 May 2024. The SEC reminds market participants that, as 28 May 2024 nears, it is critical that they prepare for the shortened settlement cycle and understand the impacts of T+1 and the final rules to identify necessary changes and critical dependencies in order to successfully manage this transition. To assess market participants’ preparedness associated with the shortening of the settlement cycle and the final rules, the SEC Division of Examinations intends to continue engaging with market participants through examinations and outreach, as applicable to each market participant type. The SEC Division of Examinations states that it is issuing the risk alert to provide market participants with additional information about the scope and content of the examinations and outreach. The risk alert contains brief details of the rule changes leading to the transition to T+1 settlement, the requirements placed on market participants, and the actions the SEC will take to oversee compliance. Link to Risk Alert here SFC: Shortening of the US Securities Transaction Settlement Cycle to T+1 On 27 March 2024, the Hong Kong Securities and Futures Commission (SFC) published a circular reminding licensed corporations (LCs) and management companies of SFC-authorised funds that they need to assess the impact of the transition, in the US, from T+2 settlement to T+1 on 28 May 2024, on their businesses and take appropriate measures to maintain their smooth and effective operations after the transition. These include enhancing their operational processes, technological infrastructure and systems as well as staffing arrangements where appropriate. The SFC states that LCs should assess their readiness and ensure they are able to cope with the shortened settlement cycle, including: • Reviewing their liquidity risk management practices and ensuring the necessary funding is available for settling US securities transactions on time. For cross-currency transactions, given that the standard settlement cycle for foreign-exchange transactions remains at T+2, LCs should be mindful of potential liquidity mismatches and settlement failures arising from the different settlement cycles for US securities and foreign-exchange transactions;