Global Trustee and Fiduciary Services Bite-Sized Issue 6 2023

Bite-Sized | 2023 Issue 6 8 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 LIBOR TRANSITION FCA Update on US Dollar LIBOR Panel On 31 May 2023 the Financial Conduct Authority (FCA) issued a statement reminding firms that the last remaining LIBOR panel, the US dollar LIBOR panel, ends on 30 June 2023. Ahead of the 30 June 2023 deadline, the FCA states that market participants must be prepared for the following: • The overnight and 12 month-US dollar LIBOR settings will cease after final publication on 30 June 2023. • The 1-, 3-, and 6-month US dollar LIBOR settings will be published in synthetic form from 3 July 2023 until end-September 2024, for use in legacy contracts only (other than in cleared derivatives). • All new use of these remaining US dollar LIBOR settings will be prohibited. This overrides the exemptions the FCA permitted to the restriction on new use imposed from 1 January 2022, and as such all new use will be prohibited under the UK Benchmarks Regulation from 1 July 2023. The FCA reminds firms that synthetic LIBOR settings are not representative and are only a temporary solution to allow more time to complete transition and ensure the orderly wind- down of LIBOR. Firms must continue to actively transition contracts that reference LIBOR to appropriate, robust reference rates, and the FCA continues to expect firms to deliver demonstrable progress. In addition to the statement, the FCA published feedback following its November 2022 consultation on its proposals for a synthetic US dollar LIBOR. Link to Statement here Link to Feedback Statement here MIFID II/MIFIR ESMA Highlights Risks Arising From Investment Firms Providing Unregulated Products and Services On 25 May 2023 the European Securities and Markets Authority (ESMA) issued a public statement to warn investors of risks that arise when investment firms offer both regulated and unregulated products and/or services. ESMA states that retail investors often rely solely on the reputation of an investment firm which makes them susceptible to overlooking potential risks of the unregulated products and/ or services offered by investment firms. This is especially so where the unregulated products have a purpose similar to financial instruments regulated under MiFID II (investment or hedge). ESMA’s statement aims to remind firms of the behaviours they are expected to adopt in such circumstances (e.g., disclosure, appropriate documentation) to make investors fully aware of the unregulated status of these products and services and of the fact that they may not benefit from the regulatory protections that apply to investments in a regulated product. In addition, ESMA recommends investment firms take into consideration the impact that their unregulated activities may have on the firm’s business activity as a whole when it comes to risk management systems and policies. Link to Statement here