Global Trustee and Fiduciary Services Bite-Sized Issue 4 2024

Global Trustee and Fiduciary Services Bite-Sized | Issue 4 | 2024 16 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 • Ensuring the availability of staff to complete the post-trade settlement processes within the shortened timeframe. Adequate training should be provided to enable relevant staff to effectively perform their duties under the shortened settlement cycle; and • Proactively engaging and communicating with their clients who are potentially affected by the Transition in order to raise their awareness and facilitate their preparations for a smooth transition. In addition, management companies of SFC-authorised funds, particularly those with considerable exposures to US securities, are reminded to: • Carefully assess the impact of the transition on their funds, including any potential mismatches in settlement cycles relating to the deployment of subscription money or sale proceeds from non-US markets to purchase US securities; • Make appropriate arrangements where necessary, such as expanding pre-funding facilities and allocating additional staff to handle the compressed settlement timeline, to ensure that the funds’ operations remain fair and orderly, and in the best interest of investors; and • Give early alerts to the SFC and investors about any intended changes, issues or untoward circumstances arising from the transition that may materially affect the funds and investors, and take remedial actions accordingly. Link to the Circular here ESMA Feedback Statement on its Call for Evidence on Shortening the Settlement Cycle On 21 March 2024, the European Securities and Markets Authority (ESMA) published its Feedback Statement on its call for evidence on shortening the settlement cycle. The objective of the call for evidence, issued in October 2023, was to collect stakeholders’ views, as well as quantitative evidence, to form a better understanding of the possibility for the EU to shorten the settlement cycle to T+1 and T+0. ESMA states that the majority of respondents to the call for evidence indicated that T+0 would not be achievable in the short or medium term, it would require radical changes to the way markets operate and would likely involve new technologies which are not yet deployed at sufficient scale in financial markets. Other concerns include loss of benefits provided by netting positions, pressure on liquidity due to the need to have all transactions pre-funded, and potential loss of anonymity in trading. ESMA states that it agrees with the feedback received on T+0 and it will therefore focus its work on shortening the settlement cycle to T+1. Link to the Feedback Statement here SUSTAINABLE FINANCE/ESG Green and Sustainable Finance Cross-Agency Steering Group and International Sustainability Standards Board Members Meet in Hong Kong On 27 March 2024, members of the Green and Sustainable Finance Cross-Agency Steering Group (Steering Group) and the International Sustainability Standards Board (ISSB) met to discuss and promote sustainability disclosures by companies and financial institutions in Hong Kong. The press release states that the “ Steering Group and the ISSB held an industry roundtable with around 20 representatives from listed companies and different financial services sectors. Participants exchanged views on their experiences in, and the unique circumstances for, entities making sustainability disclosures in Hong Kong and Asia. They also explored the core elements of a local sustainability disclosures ecosystem that will require further support. ” The press release then goes on to state that, in the subsequent discussion between the Steering Group and the ISSB, “ they agreed to strengthen collaboration on developing comprehensive capacity building programmes. They also agreed to maintain continued dialogue as Hong Kong furthers its commitment to align sustainability disclosures requirements with international standards. ”