Global Trustee and Fiduciary Services Bite-Sized Issue 6 2023

Bite-Sized | 2023 Issue 6 16 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 In closing his speech, Chair Gensler mentioned three additional trends relevant to investment management. First, the use of third-party service providers by investment advisers, where the SEC has proposed rules to ensure that advisers continue to meet their fiduciary obligations to their clients, regardless of whether they use service providers Second, the use of qualified custodians and the steps the SEC had taken to ensure that investment advisers don’t inappropriately use, lose, or abuse investors’ assets. Thirdly, the evolving challenges regarding cyber security and protecting customer information, where the SEC has proposed to enhance cybersecurity practices and incident reporting of investment advisers and funds. In addition, the SEC has put forward a proposal that would require covered firms—including investment advisers and investment companies, among others — to notify customers of breaches that might put their personal financial data at risk. Link to Speech here SEC Proposes Rule Amendments and New Rule to Improve Risk Management and Resilience of Covered Clearing Agencies On 17 May 2023 the SEC proposed rule changes that would improve the resilience and recovery and wind-down planning of covered clearing agencies. The proposal would amend the existing rules regarding intraday margin and the use of substantive inputs to a covered clearing agency’s risk-based margin system and add a new rule to establish requirements for the contents of a covered clearing agency’s recovery and wind-down plan. Specifically, the proposal would require that a covered clearing agency have policies and procedures to establish a risk-based margin system that monitors intraday exposure on an ongoing basis and includes the authority and operational capacity to make intraday margin calls as frequently as circumstances warrant, including when risk thresholds specified by the covered clearing agency are breached or when the products cleared, or markets served display elevated volatility. The proposal would also require that a covered clearing agency have policies and procedures to establish a risk-based margin system that address the use of substantive inputs to its risk-based margin system, specifically, when such inputs are not readily available or reliable. The proposal also includes a new rule, which would build upon the existing requirement that a covered clearing agency have a recovery and wind-down plan and specify nine elements that a covered clearing agency would be required to include in its recovery and wind-down plan. The public comment period will remain open for 60 days following publication of the proposing release on the SEC website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer. Link to Proposed Rule here Link to Fact Sheet here Link to Statement by Gary Gensler, Chair, Securities and Exchange Commission here Link to Statement by Commissioner Hester M. Peirce here Link to Statement by Commissioner Caroline A. Crenshaw here Link to Statement by Commissioner Mark T. Uyeda here Link to Statement by Chief Economist and Risk Analysis, Jessica Wachter here Link to Statement by Commissioner Jaime Lizárraga here Link to Statement by Haoxiang Zhu, Director, Division of Trading and Markets here Link to Statement by Elizabeth Fitzgerald, Assistant Director, Division of Trading and Markets, Office of Clearance and Settlement here