Global Trustee and Fiduciary Services Bite-Sized Issue 10 2023

Global Trustee and Fiduciary Services Bite-Sized | Issue 10 | 2023 5 QUICK LINKS CBDC DIVERSITY & INCLUSION FINTECH FUND LIQUIDITY OPERATIONAL RESILIENCE SUSTAINABLEFINANCE/ESG ASIA EUROPE LUXEMBOURG NORTH AMERICA UNITED KINGDOM The ESRB also concludes that the resilience of investment funds with large exposures to corporate debt and real estate could be further improved by adapting some of the policy tools already present in the regulatory framework. These include closer alignment between fund redemption terms and investment strategy, the use of anti-dilution LMTs, and better preparedness for cash needs stemming frommargin and/or collateral calls in derivative and repo transactions. These new tools could include a liquidity bucketing approach and the development of an ex-ante policy instrument aimed at mitigating the build-up of liquidity risk. The ESRB will also reflect on the role of authorities in applying certain policy tools to address shocks triggered, transmitted or amplified by (the collective action of) investment funds. Looking ahead, the ESRB will continue its work in two steps, which are set out below. • First, over the coming years, the ESRB will focus on adapting the tools available in the regulatory framework to better address risks in corporate debt and real estate investment funds. This will be beneficial both for the transposition of the revised directives into national law by the national authorities and for the development of the relevant Level 2 and Level 3 EU acts. • Second, over the medium term, the ESRB will assess the need for more tools to reduce systemic risk. This medium-termwork would inform any future reviews of the regulatory framework for investment funds, with such reviews expected 60 months after the revised framework has entered into force. The insights presented in the issues note will also inform the ongoing Financial Stability Board consultation on policies to address vulnerabilities from liquidity mismatch in open-ended funds. Link to Issues Note here OPERATIONAL RESILIENCE ESAs Publish Report on the Landscape of ICT Third-party Providers in the EU On 27 September 2023, the three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) published an indicative overview of information and communication technology (ICT) third- party providers (TTP) as part of their preparations for the Digital Operational Resilience Act (DORA). The analysis aims to map the provision of ICT services by TPPs to financial entities in the European Union and to support the ESAs’ policy making process considering the European Commission’s call for advice to further specify the criteria for critical ICT TPPs and to determine oversight fees. The data collection exercise onwhich the indicative overview is basedwas the first of its kind, covering ICT-related contractual arrangements for entities across the financial sector. Overall, the exercise has identified around 15,000 ICT TPPs directly serving financial sector entities across the EU. The exercise has identified that the most frequently used ICT TPPs support critical or important functions for their clients in a wide range of services. In addition, most critical services were classified as non-substitutable by financial institutions. The data collection exercise has also revealed valuable lessons for the implementation of DORA. For instance, it has underlined the importance of ensuring that financial entities provide unique identifiers in the data submitted and the need to develop an appropriate ICT services taxonomy. Link to Indicative Overview here