Global Trustee and Fiduciary Services Bite-Sized Issue 6 2023

Bite-Sized | 2023 Issue 6 5 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 To facilitate collaboration between the government, industry and academia on CBDC research, the HKMA also plans to establish a CBDC Expert Group. The Expert Group will comprise leading academics from local universities who will contribute valuable insights to support Hong Kong’s future exploration on key policy and technical issues surrounding CBDC, such as privacy protection, cybersecurity and interoperability. Link to Announcement here Link to Speech by Eddie Yue, Chief Executive, Hong Kong Monetary Authority here BIS Innovation Hub Publishes Guide on Offline CBDC Use On 11 May 2023 the BIS Innovation Hub Nordic Centre published a handbook exploring key aspects of how CBDCs could work for offline payments, as part of BIS Project Polaris. The ability to make payments offline means being able to use a CBDC without being connected to the internet, either temporarily or because of coverage limitations. Central Banks considering the potential implementation of CBDCs with offline functionality must consider a complex matrix of issues including security, privacy, likely risks, the types of solution, their maturity and applicability, and operational factors. The handbook, compiled in partnership with Consult Hyperion, addresses these issues as well as objectives for resilience, inclusion, cash resemblance, accessibility and other desired attributes. The degree to which CBDCs will be provided or used offline will vary significantly by country, region, demographics and specific contexts, which will also influence the solutions chosen. Over several workstreams, Project Polaris will provide Central Banks with the essential information needed to inform decision-making, architecture, design, implementation planning and investments. It will also address long-term change and operational considerations. Link to the Handboo k here COSTS & CHARGES ESMA Calls for Legislative Amendments to Prevent Undue Costs in Funds On 17 May 2023 the European Securities and Markets Authority (ESMA) published an Opinion to the European Commission with suggested clarifications of the legislative provisions under the UCITS Directive and the AIFMD relating to the notion of “undue costs”. This initiative was prompted by one of the findings of the ESMA 2021 Common Supervisory Action on costs and fees, which showed divergent market practices as to what industry reported as “due” or “undue” costs in funds. Apart from the high investor protection relevance of this matter, ESMA deems that a lack of supervisory convergence on this topic leaves room for regulatory arbitrage and risks hampering competition in the EU market. Furthermore, it may lead to different levels of investor protection depending on where a fund or fund manager is domiciled. ESMA’s proposal is to take as a basis the supervisory expectations enshrined in the 2020 supervisory briefing on the supervision of costs and ground these expectations into clearer legal requirements. This would allow National Competent Authorities to build on the supervisory efforts already deployed to ensure an even higher level of investor protection thanks to a stronger legal hook (to undertake enforcement actions) in the UCITS and AIFMD frameworks. Link to the Opinion here