Global Trustee and Fiduciary Services Bite-Sized Issue 6 2023

Bite-Sized | 2023 Issue 6 15 QUICK LINKS AIFMD ANTI-MONEY LAUNDERING CMU — RETAIL INVESTMENT PACKAGE CBDC COSTS & CHARGES CRYPTOASSETS ELTIF IFD/IFR LIBOR TRANSITION MIFID II/MIFIR MONEY MARKET FUNDS OPERATIONAL RESILIENCE SUSTAINABLE FINANCE/ESG WHISTLEBLOWING AUSTRALIA EUROPE LUXEMBOURG NORTH AMERICA UNITED KINGDOM The aim of this joint initiative was primarily to assess the level of adoption of these technologies by supervised institutions and to analyse the implementation of AI with their related challenges, including AI trustworthiness aspects (e.g., explainability, ethics, bias and fairness, auditability, etc.). The present joint Thematic report on AI reproduces a summary of the main findings from the survey. Link to Review here NORTH AMERICA Speech by SEC Chair Gary Gensler: Bear in the Woods On 25 May 2023, Gary Gensler, Chair of the Securities and Exchange Commission (SEC), delivered a speech to the Investment Company Institute. In his speech Chair Gensler discussed the regulation of collective investment vehicles in how they manage dilution and liquidity. Chair Gensler noted the SEC’s proposals to enhance the liquidity requirements for money market funds, such as swing-pricing for institutional and tax-exempt money market funds. Moving to open-ended funds, Chair Gensler noted proposals to establish minimum standards for liquidity classifications, designed to prevent funds from overestimating the liquidity of their investments. He also highlighted proposals for ensuring redeeming investors bear the appropriate costs associated with their redemptions, particularly in times of stress. Chair Gensler concluded by noting that other forms of collective investment vehicle, overseen by bank regulators, suffer the same liquidity risks as vehicles overseen by the SEC, and that the SEC is in discussion with bank regulators to address the potential arbitrage arising from differing regulations. Link to Speech here Speech by SEC Chair Gary Gensler: Honest and Unbiased Investment Management On 19 May 2023 SEC Chair Gary Gensler delivered a speech to the SEC’s Division of Investment Management’s inaugural Conference on Emerging Trends in Asset Management. Chair Gensler commenced his speech by summarising the early history of securities regulation, the SEC, and the risks to investors who were dealing with investment advisers and investment companies during those early years. Chair Gensler proceeded to discuss the evolving regulation of private funds, where the SEC has proposed a rule that would require private fund advisers to provide detailed reporting to investors of fees, expenses, performance, and preferential treatment, such as in side letters. In addition, working with the Commodity Futures Trading Commission, the SEC has proposed enhanced periodic reporting for large hedge funds. Also, the SEC recently adopted rules requiring private fund advisers to make current reports of events that may indicate significant stress or otherwise signal for systemic risk and investor harm. Moving on to registered investment funds, Chair Gensler noted proposals with regard to the liquidity and pricing of funds that are designed to help protect investors and promote fund resiliency. Other proposals include an update to the 22-year-old Names Rule to enhance transparency regarding fund names, including in respect to Environmental, Social and Governance-related (ESG) fund names, and a separate proposal to establish disclosure requirements for funds and advisers that market themselves as having an ESG focus. For separately managed accounts, Chair Gensler discussed the need for investment advisers to act in investors’ best interests and not put their own interests ahead of an investor’s, in line with their fiduciary duty, and potential conflicts of interest arising as a result of new technologies.