Global Trustee and Fiduciary Services Bite-Sized Issue 6 2024

4 QUICK LINKS AIFMD CMU CRYPTOASSETS EMIR FINTECH IFD/IFR MAR MIFID II/MIFIR OPERATIONAL RESILIENCE SECURITISATION SUSTAINABLE FINANCE/ESG UCITS ASIA EUROPE UNITED STATES UNITEDKINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 6 | 2024 From 30 September 2024 all newly entered or modified derivative trades at both trade and position level will need to comply with the new requirements. For derivative trades entered into before 30 September 2024, there will be a six-month transition period for entities responsible for reporting to update those outstanding derivative reports to the new requirements. This ends on 31 March 2025. This set of Q&As relates to the arrangements for transitioning to the updated derivative reporting framework under UK EMIR during the period from 30 September 2024 to 31 March 2025. Link to Q&As here FINTECH ESMA Provides Guidance to Firms Using Artificial Intelligence in Investment Services On 30 May 2024, the European Securities and Markets Authority (ESMA) issued a Statement providing initial guidance to firms using Artificial Intelligence technologies (AI) when they provide investment services to retail clients. When using AI, ESMA expects firms to comply with relevant MiFID II requirements, particularly when it comes to organisational aspects, conduct of business, and their regulatory obligation to act in the best interest of the client. ESMA states that, although AI technologies offer potential benefits to firms and clients, they also pose inherent risks, such as: • Algorithmic biases and data quality issues; • Opaque decision-making by a firm’s staff members; • Overreliance on AI by both firms and clients for decision-making; and • Privacy and security concerns linked to the collection, storage, and processing of the large amount of data needed by AI systems. ESMA says that potential uses of AI by an investment firmwhich would be covered by requirements under MiFID II, include customer support, fraud detection, risk management, compliance, and support to firms in the provision of investment advice and portfoliomanagement. Link to the Statement here CFTC’s Technology Advisory Committee Advances Report and Recommendations to the CFTC on Responsible Artificial Intelligence in Financial Markets On 2 May 2024, the Commodity Futures Trading Commission’s Technology Advisory Committee (TAC) published a Report on Responsible AI in Financial Markets (Report) that aims to facilitate an understanding of the impact and implications of the evolution of AI on financial markets. In the Report, the TAC makes five recommendations to the CFTC as to how it should approach the AI evolution to safeguard financial markets. The CFTC should: • Host a public roundtable discussion and CFTC staff should directly engage in outreach with CFTC-registered entities to seek guidance and gain additional insights into the business functions and types of AI technologies most prevalent within the sector. • Consider the definition and adoption of an AI Risk Management Framework (RMF) for the sector, in accordance with the guidelines and governance aspects of the National Institute of Standards and Technology, to assess the efficiency of AI models and potential consumer harms as they apply to regulated entities, including but not limited to governance issues. • Create an inventory of existing regulations related to AI in the sector and use it to develop a gap analysis of the potential risks associated with AI systems to determine compliance relative to further opportunities for dialogue on their relevancy, and potential clarifying staff guidance or potential rulemaking.