Global Trustee and Fiduciary Services Bite-Sized Issue 5 2024

Global Trustee and Fiduciary Services Bite-Sized | Issue 5 | 2024 5 QUICK LINKS CYBERSECURITY DIVERSITY DORA ELTIF EMIR FINTECH FSB IOSCO SUSTAINABLE FINANCE/ESG UCITS ASIA EUROPE NETHERLANDS NORTH AMERICA UNITED KINGDOM The FCA adds that this includes – scrutiny of the systems and processes firms have in place to ensure its regulatory expectations are met. And the FCA believes an evidence-based view, one that balances both the benefits and risks of AI, will ensure a proportionate, effective and pro- innovation approach to the use of AI in financial services. In its AI Update the FCA outlines its: • Role and objectives; • Work so far; • Existing approach; and • Plans for the next 12 months. Link to FCA AI Update here ESMA Publishes Outcome of First Year of the DLT Pilot Regime On 4 April 2024, the European Securities and Markets Authority (ESMA) published a letter to the European Commission, the Parliament, and the Council (ECOFIN) providing an interim update on the DLT Pilot Regime. ESMA’s letter provides an update on the status of applications received by national competent authorities (NCAs) to date, as well as a list of challenges and opportunities identified in the first year of application. ESMA says it has opted for this format instead of the report mandated under the DLT Pilot Regime because no DLT market infrastructures have been authorised under the Regime to date, rendering a full report premature. The letter provides recommendations to the European Commission to enhance the functioning and competitiveness of the Regime. ESMA says that it will continue to work closely with the NCAs, including by issuing opinions on the DLT market infrastructure applications, and will publish annual updates on the implementation of the DLT Pilot Regime. Link to ESMA’s Letter here FCA and BoE issue Joint Consultation on the Digital Securities Sandbox On 3 April 2024, the Bank of England (BoE) and Financial Conduct Authority (FCA) (collectively the ‘regulators’) issued a joint consultation (CP24/5) on their proposed approach to operating the Digital Securities Sandbox (DSS). The DSS is an initiative run by the regulators that will help facilitate the adoption of innovative technology in digital assets in the UK. The DSS will modify regulations in the UK to enable financial market participants to use new technology – such as Distributed Ledger Technology (DLT) – in the trading and settlement of digital securities such as shares and bonds. The regulators state that successful applicants to the DSS will be able to provide securities depository and settlement services and operate a trading venue under those modified regulations. For the first time, they will be able to provide these services from a single legal entity. The DSS will be open to a wide range of firms, including new financial markets infrastructure (FMI) providers, to maximise the opportunities to learn and for the UK financial system to benefit from private sector innovation and competing business models. The regulators state that the DSS will last five years and may lead to a new permanent regulatory regime for securities settlement under which firms could operate in future. The consultation invites views from interested participants on how the DSS will operate in practice, in order to maximise the potential benefits from the technology while protecting financial stability and market integrity. The deadline for responses is 29 May 2024. Link to CP24/5 here