Global Trustee and Fiduciary Services Bite-Sized Issue 7 2025

2 QUICK LINKS AIFMD CSDR ELIGIBLE ASSETS DIRECTIVE EMIR FINTECH FSB MIFID II/MIFIR SUSTAINABLE FINANCE/ESG VIRTUAL ASSETS ASIA PACIFIC EUROPE NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 7 | 2025 CSDR ESMA Narrows Down the Scope of CSDR Cash Penalties On 26 June 2025, the European Securities and Markets Authority (ESMA) published a final report that specifies the scope of Central Securities Depositories Regulation (CSDR) cash penalties, supporting the simplification and burden reduction in post-trading. In linewith the revised settlement discipline framework set out in CSDRRefit, ESMA provides technical advice to the European Commission (Commission) on the scope of settlement discipline, identifying: • The causes of settlement fails that are considered as not attributable to the participants in the transaction; and • The circumstances in which operations are not considered as trading. According to the technical advice, ESMA says that a broad range of scenarios would not trigger CSDR cash penalties. These include: • Technical failures at the CSD level, such as systemoutages, cyberattacks, or network disruptions; • Full-day trading suspensions of an ISIN on its most liquid market; and • Technical creation and redemption of fund units or shares on the primary market, including those related to Exchange-Traded Funds. ESMA says that the Commission will consider its technical advice when preparing a new delegated act supplementing CSDR, further specifying the scope of operations and transactions subject to the settlement discipline regime. Link to Final Report here ELIGIBLE ASSETS DIRECTIVE ESMA Publishes Technical Advice to the Commission on the Review of the UCITS EAD On 26 June 2025, the European Securities and Markets Authority (ESMA) published its Technical Advice to the European Commission (Commission) on the review of the UCITS Eligible Assets Directive (EAD). The EAD is an implementing directive providing clarification on the assets that a UCITS can invest in. ESMA says that the policy proposals it has put forward aim to overcome the currently divergent National Competent Authority and market practices on this matter and therefore foster supervisory convergence and reduce the burden for UCITS management companies operating and/ or marketing UCITS on a cross-border basis. ESMA says that a central element of the Technical Advice is the application of a look-through approach as a fundamental criterion for determining the eligibility of asset classes for at least 90% of the UCITS portfolio. Allowing a certain degree of flexibility, ESMA says that the Technical Advice proposes to permit indirect exposures to alternative assets up to 10% (subject to regulatory safeguards e.g. on liquidity and valuation) with a view to improving risk diversification and generating returns from uncorrelated asset classes. The Technical Advice proposes clarifications of various key concepts and definitions included in the UCITS EAD and the UCITS Directive concerning the criteria for the UCITS eligibility of asset classes. Finally, it also includes considerations and proposals on the alignment with other EU pieces of legislation. ESMA says that it expects the Commission to take this Technical Advice into account as it reviews the UCITS EAD. Link to Advice here