Global Trustee and Fiduciary Services Bite-Sized Issue 4 2025

5 QUICK LINKS BENCHMARKSREGULATION CMU/SIU DORA FINTECH IOSCO MIFID II/MIFIR SUSTAINABLE FINANCE/ESG ASIA PACIFIC EUROPE NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 4 | 2025 IOSCO Publishes NewConsultation Report on AI in Capital Markets: Use Cases, Risks, and Challenges Also on the 12 March 2025, IOSCO announced the publication of a new substantive report that addresses the rise of Artificial Intelligence (AI) use in capital markets and its impact on investors globally. IOSCO says that the report, ‘AI in Capital Markets: Use Cases, Risks, and Challenges’ (the Report), was developed by IOSCO’s Fintech Task Force (FTF) to create a shared understanding among IOSCOmembers of the issues, risks, and challenges that emerging AI technologies used in financial products and services may pose to investor protection, market integrity, and financial stability, and to assist IOSCOmembers as they consider regulatory responses. IOSCO says that the Report identifies five key findings: • Firms are increasingly using AI to support decision-making processes in applications and functions such as robo-advising, algorithmic trading, investment research, and sentiment analysis. AI is also being used to enhance surveillance and compliance functions, particularly in anti-money laundering and counter-terrorist financing measures; • Firms are using recent advancements in AI to support internal operations and processes through task automation; to enhance communications; and to improve risk management functions; • Risks most commonly cited with respect to the use of AI systems in the financial sector include malicious uses of AI; AI model and data considerations; concentration, outsourcing, and third- party dependency; and interactions between humans and AI systems; • Industry practices are evolving, with some financial institutions incorporating AI into existing risk management and governance structures, and others establishing more bespoke frameworks; and • Regulatory responses to the use of AI in the financial sector are also evolving, with some regulators applying existing regulatory frameworks to AI activities, and others developing new regulatory frameworks to address the unique challenges posed by AI. IOSCO states that it will continue to play a coordinating role regarding AI developments in the financial sector and to engage with other relevant international organisations, such as the Financial Stability Board. The deadline for responses on the Consultation Report was 11 April 2025. Link to Consultation Report here MIFID II/MIFIR ESMA Consults on Transparency Requirements for Derivatives Under MiFIR Review On 3 April 2025, the European Securities and Markets Authority (ESMA) published a consultation, asking for input on proposals for Regulatory Technical Standards (RTS) on transparency requirements for derivatives, amendments to RTS on package orders, and RTS on input/output data for the over-the-counter (OTC) derivatives consolidated tape. ESMA says it is developing various technical standards further specifying certain provisions set out in the Market in Financial Instruments Regulation (MiFIR) Review. This consultation paper covers the following three areas: • Transparency requirements for derivatives : covering the new deferral regime for Exchange Traded Derivatives (ETD) and OTC derivatives, specifying size thresholds, liquidity determination and deferral durations for post-trade transparency. ESMA also asks input on limited amendments for pre-trade waivers, and amendments to post-transparency fields and flags. • RTS on package orders : considering the new scope and liquidity determination for derivatives. • RTS on input/output data for the OTC derivatives consolidated tape : including the data quality requirements for the prospective CTPs and data contributors.