Global Trustee and Fiduciary Services Bite-Sized Issue 1 2025

18 QUICK LINKS AIFMD CRYPTOASSETS EMIR FINTECH MIFID II/MIFIR MMF NBFI OPERATIONAL RESILIENCE SUSTAINABLE FINANCE/ESG ASIA IRELAND LUXEMBOURG NETHERLANDS NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 1 | 2025 • Depository Institutions : Overall, the U.S. banking system remains resilient, supported by sound levels of regulatory capital, adequate liquidity buffers, and healthy levels of profitability. However, some potential vulnerabilities warrant continued monitoring, including the weakening credit conditions in commercial real estate (CRE) and the strong reliance of some banks on non-deposit funding and uninsured deposit funding. The Council recommends that banks continue to ensure they have sound risk management practices, including contingency planning for funding and liquidity events. The Council also encourages efforts to complete the Basel III reforms to further enhance the resilience of the banking system. • Third-Party Service Providers : To enhance information security within third-party service providers and address other critical regulatory challenges, the Council recommends that Congress pass legislation ensuring the Federal Housing Finance Agency, National Credit Union Administration, and other relevant agencies have adequate examination and enforcement powers to oversee third-party service providers that interact with their regulated entities. The Council also recommends that federal banking regulators continue to coordinate third-party service provider examinations, work collaboratively with states, and identify additional ways to support information sharing among state and federal regulators. • Commercial Real Estate : The Council recommends regulators continue to focus on the financial industry’s ability to withstand CRE stress from declines in property prices and loan quality. CRE exposure among bank and nonbank industry participants can also be interconnected. Therefore, the Council recommends that member agencies ensure financial institutions continue to monitor these correlated risks in their risk management and contingency planning. • Digital Assets : The Council continues to monitor risks related to crypto assets. The Council reiterates its prior recommendation that Congress pass legislation to create a comprehensive federal prudential framework for stablecoin issuers. The Council also recommends that Congress pass legislation providing federal financial regulators with explicit rulemaking authority over the spot market for crypto assets that are not securities. • Investment Funds : The Council and its member agencies have made progress addressing financial vulnerabilities stemming from investment funds, including the SEC’s reforms to make money market funds more resilient, liquid, and transparent. Nevertheless, open-end funds with significant liquidity mismatches may face challenges meeting large redemption requests during times of market stress, potentially disrupting market functioning. Collective investment funds (CIFs) and other short-term investment vehicles share similar features that can contribute to financial stability risk. The Council supports the SEC’s continued engagement on open- end funds, including the SEC’s adoption of amendments to require more frequent and timely reporting of funds’ portfolio information. The Council and state and federal regulators should consider what steps are needed to address financial stability risks from open-end funds and CIFs. Lastly, the Council has continued working to support better data collection and monitoring to identify risks from highly leveraged hedge funds and the growth in private credit. Link to Full Report here Link to Statement by Secretary of the Treasury Janet L. Yellen here UNITED KINGDOM CP24/30: A New Product Information Framework for Consumer Composite Investments On 19 December 2024, the Financial Conduct Authority (FCA) published a consultation on a new product information regime which aims to help consumers understand the investment products they are buying, while giving firms flexibility to innovate. The FCA says it wants to make significant changes to the rules for the way product information is presented. Its proposals aim to move from the current prescriptive disclosure regime to a more flexible, simpler approach. The FCA says the new regime looks to prioritise good consumer outcomes through empowering consumers to make effective, timely and properly informed decisions, and enables firms to tailor their communications to meet consumers’ needs.