Global Trustee and Fiduciary Services Bite-Sized Issue 6 2023

Bite-Sized | 2023 Issue 6 9 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 MONEY MARKET FUNDS Stress Testing MMFs in the EU — First Evidence from Fund Reporting On 6 June 2023 the European Securities and Markets Authority (ESMA) published an article on the results of the Money Market Funds (MMFs) stress tests reported to ESMA. The results show that liquidity and credit risks would be the most impactful for MMFs, in the context of the adverse scenario. The different redemption scenarios tested however show the capability of MMFs to meet redemption requests under adverse circumstances, despite a calibration reflecting the intensity of the March 2020 stress episode. In the article ESMA also highlights the relative proximity of the LVNAV 20 bps threshold, which would be exceeded in the liquidity and credit risk scenarios. While this possibility is foreseen in the MMF Regulation, these findings support the concerns expressed in the ESMA opinion r egarding the consequences of funds breaching the threshold. ESMA Guidelines on MMF stress tests provide risk parameters to fund managers, which are updated on an annual basis according to an adverse scenario designed by the European Systemic Risk Board and the European Central Bank. MMF managers in the EU are required to undertake stress tests in accordance with these rules and report the results of their simulations back to their national authorities and ESMA as part of their regular regulatory reporting. This article presents the results of the stress tests reported at the end of 2021, drawing lessons from the stress episode affecting MMFs in March 2020 in a context of deep global recession caused by the COVID-19 pandemic. Link to the Article here OPERATIONAL RESILIENCE ESAs Launch Discussion on Criteria for Critical ICT Third-party Service Providers and Oversight Fees On 26 May 2023 the European Supervisory Authorities (EBA, EIOPA and ESMA — ESAs) published a joint Discussion Paper seeking stakeholders’ input on aspects of the Digital Operational Resilience Act (DORA). This Discussion Paper follows the European Commission’s request for technical advice on the criteria for critical ICT third-party providers (CTPPs) and the oversight fees to be levied on them. The Discussion Paper is separated into two parts: • Proposals covering the criteria to be considered by the ESAs when assessing the critical nature of ICT third-party service providers, in particular, a number of relevant quantitative and qualitative indicators for each of the criticality criteria, along with the necessary information to construct such indicators; and • Proposals in relation to the amount of the fees levied on CTPPs and the way in which they are to be paid, in particular the types of expenditure that shall be covered by fees as well as the appropriate method, basis and information for determining the applicable turnover of the CTPPs, which will form the basis of fee calculation. The ESAs are also seeking input on the fee calculation method and other practical issues regarding the payment of fees. The period for input ends on 23 June 2023. Link to the Discussion Paper here