Global Trustee and Fiduciary Services Bite-Sized Issue 8 2023

Global Trustee and Fiduciary Services Bite-Sized | Issue 8 | 2023 16 QUICK LINKS ANTI-MONEY LAUNDERING CBDC COSTS & CHARGES CRYPTOASSETS CULTURE & CONDUCT CYBERSECURITY EMIR FINTECH FSB FUND LIQUIDITY MIFID II/MIFIR SUSTAINABLE FINANCE/ ESG AUSTRALIA ASIA IRELAND NORTH AMERICA UNITED KINGDOM IRELAND Central Bank Issues Discussion Paper for Macroprudential Policy for Investment Funds On 18 July 2023 the Central Bank of Ireland (Central Bank) invited feedback from stakeholders after publishing its Discussion Paper ‘An Approach to Macroprudential Policy for Investment Funds’ (the DP). The Central Bank says that the DP aims to advance the ongoing international and European discussions on how a macroprudential perspective in the regulation of the funds sector could be achieved. The DP outlines key considerations for developing and operationalising such a framework. The Central Bank states that a macroprudential framework for the funds sector would take a system-wide perspective and aim to ensure that this growing segment of the financial sector is more resilient to stresses and less likely to amplify adverse shocks. In turn, this would better equip the sector to serve as a resilient form of financing, supporting broader economic activity. This has been a key focus of work for the Central Bank and policymakers globally. The deadline for responses is 15 November 2023. After considering feedback, the Central Bank will publish a feedback statement in 2024. Link to Discussion Paper here NORTH AMERICA SEC Proposes NewRequirements to Address Risks to Investors fromConflicts of Interest Associatedwith the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers On 26 July 2023 the Securities and Exchange Committee (SEC) proposed new rules that would require broker-dealers and investment advisers (collectively, “firms”) to take certain steps to address conflicts of interest associated with their use of predictive data analytics and similar technologies to interact with investors to prevent firms from placing their interests ahead of investors’ interests. The SEC says the use by firms of technologies to optimise for, predict, guide, forecast, or direct investment-related behaviours or outcomes has accelerated. Use of such technologies can be beneficial to investors in providing greater market access, efficiency, and returns. To the extent that firms are using certain technologies in a manner that places their own interests ahead of investors’ interests, however, investors can suffer financial harm. Given the scalability of these technologies and the potential for firms to reach a broad audience at a rapid speed, any resulting conflicts of interest could cause harm to investors in a more pronounced fashion and on a broader scale than previously possible. Building off existing legal standards, the SEC’s proposed rules generally would require a firm to evaluate and determine whether its use of certain technologies in investor interactions involves a conflict of interest that results in the firm’s interests being placed ahead of investors’ interests. Firms would be required to eliminate, or neutralise the effect of, any such conflicts, but firms would be permitted to employ tools that they believe would address these risks and that are specific to the particular technology they use, consistent with the proposal. The proposed rules would also require a firm to have written policies and procedures reasonably designed to achieve compliance with the proposed rules and to make and keep books and records related to these requirements. Link to Proposed Rule here Link to Fact Sheet here Statement by SEC Chair Gary Gensler here Link to Statement by SEC Commissioner Jaime Lizarraga here Link to Statement by SEC Commissioner Hester M. Peirce here Link to Statement by SEC Commissioner Caroline A. Crenshaw here Link to Statement by SEC Commissioner Mark T. Uyeda here