On 11 October 2027, the financial markets of the European Union (EU), United Kingdom (UK), and Switzerland and Liechtenstein, will, or are considering moving to a T+1 settlement cycle, bringing them into line with other financial centres that have already commenced or completed the move.

All Aboard the Train Bound for T+1: Next Stop, October 2027

Stay up-to-date on the latest regulatory developments from our Trustee &amp; Fiduciary Regulatory Services Team

Trustee & Fiduciary Regulatory Insights

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Welcome to the latest article in our ‘Transformation is inevitable’ series, where we provide insights based on our on-going analysis of the complex, changing and ambitious regulatory policy environment, evolving customer and employee needs, as well as advancing technology.&nbsp;In our first two articles we looked at <a href="https://www.citigroup.com/global/insights/securities-services/transformation-is-inevitable-the-vista-for-asset-mangers" target="_blank" rel="noopener">the future of work and sustainable finance</a>, and the possible future direction of UK regulation now that the UK is no longer part of the European Union. In this, our third article, we look at the potential risks that may arise from the ever-increasing use of cloud outsourcing.

Transformation Is Inevitable  — The Risks of Cloud Concentration

The potential risks that may arise from the ever-increasing use of cloud outsourcing.

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In addition to the proposals contained within the roadmap, ESMA will also continue to monitor major EU and international developments and contribute as necessary to the various initiatives in the area of sustainable finance, including in the EU Platform on Sustainable Finance, the International Organization of Securities Commissions (IOSCO), as well as in relevant workstreams within the Network for Greening the Financial System (NGFS).

In addition to the proposals contained within the roadmap, ESMA will also continue to monitor major EU and international developments and contribute as necessary to the various initiatives in the area of sustainable finance, including in the EU Platform on Sustainable Finance, the International Organization of Securities Commissions (IOSCO), as well as in relevant workstreams within the Network for Greening the Financial System (NGFS).

The Sustainable Finance Roadmap sets out priority areas and related actions for the European Securities and Markets Authority (ESMA) in sustainable finance for the period covering 2022–2024.

ESMA Lays out its Sustainable Finance Roadmap

The proposal aims to foster sustainable and responsible corporate behaviour throughout global value chains. Companies will be required to identify and, where necessary, prevent, end, or mitigate adverse impacts of their activities on human rights, such as child labour and exploitation of workers, and on the environment, for example pollution and biodiversity loss. The European Commission says that for businesses these new rules will bring legal certainty and a level playing field, whilst for consumers and investors they will provide more transparency.

The proposal aims to foster sustainable and responsible corporate behaviour throughout global value chains. Companies will be required to identify and, where necessary, prevent, end, or mitigate adverse impacts of their activities on human rights, such as child labour and exploitation of workers, and on the environment, for example pollution and biodiversity loss. The European Commission says that for businesses these new rules will bring legal certainty and a level playing field, whilst for consumers and investors they will provide more transparency.

On 23 February 2022 the European Commission proposed rules for companies to respect human rights and the environment in global value chains.

Respect for Human Rights and the Environment

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The disclosure proposals will require registrants (domestinc or foreign) to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements. The required information on climate-related risks would also include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks.

The disclosure proposals will require registrants (domestinc or foreign) to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements.
The required information on climate-related risks would also include disclosure of a registrant&rsquo;s greenhouse gas emissions, which have become a commonly used metric to assess a registrant&rsquo;s exposure to such risks.

The much-anticipated Securities and Exchange Commission proposals for enhancing and standardizing climate-related disclosures for investors were published on 21 March 2022, marking a significant step in the current US government’s response to climate change.

The Enhancement and Standardization of US Climate-related Disclosures for Investors

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Welcome to the latest article in our ‘Transformation is inevitable’ series, where we provide insights based on our on-going analysis of the complex, changing and ambitious regulatory policy environment, evolving customer and employee needs, as well as advancing technology. In earlier articles we have looked at the future of work and sustainable finance, the possible future direction of UK regulation now that the UK is no longer part of the European Union, and the potential risks that may arise from the ever-increasing use of cloud outsourcing. In this article we review how regulators first adjusted their agendas to tackle the impact of COVID-19 on financial services, pivoted towards post-pandemic course corrections, and what that now means, with a focus on the macro regulatory agenda, for risk and compliance professionals in the asset management industry.

<div>Welcome to the latest article in our &lsquo;Transformation is inevitable&rsquo; series, where we provide&nbsp;insights based on our on-going analysis of the complex, changing and ambitious regulatory&nbsp;policy environment, evolving customer and employee needs, as well as advancing technology.</div>
<div>&nbsp;</div>
<div>In earlier articles we have looked at the future of work and sustainable finance, the possible future direction of UK regulation now that the UK is no longer part of the European Union,&nbsp;and the potential risks that may arise from the ever-increasing use of cloud outsourcing.&nbsp;</div>
<div>&nbsp;</div>
<div>In this article we review how regulators first adjusted their agendas to tackle the impact&nbsp;of COVID-19 on financial services, pivoted towards post-pandemic course corrections, and&nbsp;what that now means, with a focus on the macro regulatory agenda, for risk and compliance&nbsp;professionals in the asset management industry.</div>

What the post COVID-19 regulatory agenda means for risk and compliance professionals in the asset management industry.

Transformation is Inevitable — The Vista for Risk and Compliance

The European Commission (EC) state that sustainability-related disclosures in the financial services sector should be sufficiently clear, concise and prominent to enable end investors to take informed decisions. The aim is for end investors to have access to reliable data that they can use and analyse in a timely and efficient manner. As part of achieving this aim, the EC, by way of a Delegated Regulation, adopted on 6th April 2022 regulatory technical standards (RTS) to be used by financial market participants (FMPs) when disclosing sustainability-related information under the Sustainable Finance Disclosure Regulation (SFDR). Five separate Annexes were also adopted.

The European Commission (EC) state that sustainability-related disclosures in the financial&nbsp;services sector should be sufficiently clear, concise and prominent to enable end investors to take&nbsp;informed decisions. The aim is for end investors to have access to reliable data that they can use&nbsp;and analyse in a timely and efficient manner.
As part of achieving this aim, the EC, by way of a Delegated Regulation, adopted on 6th April&nbsp;2022 regulatory technical standards (RTS) to be used by financial market participants (FMPs)&nbsp;when disclosing sustainability-related information under the Sustainable Finance Disclosure&nbsp;Regulation (SFDR). Five separate Annexes were also adopted.

The European Commission adopts the regulatory technical standards for the SFDR.

The Long Anticipated Disclosure Rules on Sustainable Investments are Here

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Whilst recent developments in digitalisation are unlikely to represent the end of asset management models as we currently know them, investing in digitalisation is becoming essential to ensuring that your business maintains its market leading position in an industry where digitalisation using artificial intelligence (AI), once a nice to have, may soon be indispensable. This opening statement sits rather neatly within our series of articles ‘Transformation is Inevitable’, as nowhere is this truer than around digitalisation, which is increasingly being powered by transformative technologies such as AI.

<h6>Whilst recent developments in digitalisation are unlikely to represent the end of asset management models as we currently know them, investing in digitalisation is becoming essential to ensuring that your business maintains its market leading position in an industry where digitalisation using artificial &nbsp;intelligence (AI), once a nice to have, may soon be indispensable.</h6>
<h6>This opening statement sits rather neatly within our series of articles &lsquo;Transformation is &nbsp;Inevitable&rsquo;, as nowhere is this truer than around digitalisation, which is increasingly being powered by transformative technologies such as AI.</h6>

How transformative technologies such as AI are powering digitalisation.

Transformation is Inevitable - AI for Asset Managers 

On 10 February 2023, the UK’s Financial Conduct Authority (FCA) published a Discussion Paper: ‘Finance for positive sustainable change: governance, incentives and competence in regulated firms’ (DP23/1). In DP23/1, the FCA states that it believes that good governance and a healthy culture is critical to financial services firms’ being able to deliver value to clients and consumers, as well as supporting market integrity. The FCA notes that the aim of DP23/1 is to encourage an industry-wide dialogue on firms’ sustainability-related governance, incentives, and competencies. In DP23/1, the FCA highlights that certain firms have already integrated material sustainability-related risks, opportunities and, in certain cases, impacts into their business, risk and capital allocation decisions.

On 10 February 2023, the UK&rsquo;s Financial Conduct Authority (FCA) published a Discussion Paper: &lsquo;Finance for positive sustainable change: governance, incentives and competence in regulated firms&rsquo; (DP23/1). 
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In DP23/1, the FCA states that it believes that good governance and a healthy culture is critical to financial services firms&rsquo; being able to deliver value to clients and consumers, as well as supporting market integrity.
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The FCA notes that the aim of DP23/1 is to encourage an industry-wide dialogue on firms&rsquo; sustainability-related governance, incentives, and competencies.
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In DP23/1, the FCA highlights that certain firms have already integrated material sustainability-related risks, opportunities and, in certain cases, impacts into their business, risk and capital allocation decisions.

On 10 February 2023, the UK’s Financial Conduct Authority (FCA) published a Discussion Paper: ‘Finance for positive sustainable change: governance, incentives and competence in regulated firms’ (DP23/1).   

UK FCA Publish Discussion Paper on Finance for Positive Sustainable Change

On 13 March 2023 the Central Bank of Ireland (Central Bank) published Consultation Paper 153 — Enhanced Governance, Performance and Accountability in Financial Services (CP153), which consults on key aspects of the implementation of the Individual Accountability Framework (IAF), including the publication of draft Regulations and Guidance. In addition to the IAF, the draft Regulations and Guidance seek to provide clarity in terms of the Central Bank’s expectations for the implementation of three aspects of the IAF: the Senior Executive Accountability Regime (SEAR), the Conduct Standards and certain aspects of the enhancements to the Fitness & Probity Regime. CP153 follows on from the enactment of the Central Bank’s IAF Bill 20224, which was signed into law on 9 March 2023 by the President of Ireland and became the Central Bank IAF Act 2023.

On 13 March 2023 the Central Bank of Ireland (Central Bank) published Consultation Paper 153 &mdash; Enhanced Governance, Performance and Accountability in Financial Services (CP153), which consults on key aspects of the implementation of the Individual Accountability Framework (IAF), including the publication of draft Regulations and Guidance.
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In addition to the IAF, the draft Regulations and Guidance seek to provide clarity in terms of the Central Bank&rsquo;s expectations for the implementation of three aspects of the IAF: the Senior Executive Accountability Regime (SEAR), the Conduct Standards and certain aspects of the enhancements to the Fitness &amp; Probity Regime.
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CP153 follows on from the enactment of the Central Bank&rsquo;s IAF Bill 20224, which was signed into law on 9 March 2023 by the President of Ireland and became the Central Bank IAF Act 2023.

Central Bank Consults on Implementation of the Individual Accountability Framework

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Welcome to the latest article in our ‘Transformation is Inevitable’ series, where we provide insights based on our on-going analysis of the complex, changing and ambitious regulatory policy environment, evolving customer needs, as well as advancing technology. In earlier articles we looked at the future of work and sustainable finance, the potential risks arising from the increasing use of cloud outsourcing and how regulators adjusted their agendas to tackle the impact of COVID-19 on financial services, amongst others. In this article, we consider the key regulatory themes to watch out for in 2023 and beyond. Certain themes will be familiar, whilst others may only just be entering the peripheral scope for the asset management industry.

Welcome to the latest article in our &lsquo;Transformation is Inevitable&rsquo; series, where we provide insights based on our on-going analysis of the complex, changing and ambitious regulatory policy environment, evolving customer needs, as well as advancing technology.
&nbsp;
In earlier articles we looked at the future of work and sustainable finance, the potential risks arising from the increasing use of cloud outsourcing and how regulators adjusted their agendas to tackle the impact of COVID-19 on financial services, amongst others.
&nbsp;
In this article, we consider the key regulatory themes to watch out for in 2023 and beyond. Certain themes will be familiar, whilst others may only just be entering the peripheral scope for the asset management industry.
&nbsp;

In this series, we provide insights based on our on-going analysis of the complex, changing and ambitious regulatory policy environment, evolving customer needs, as well as advancing technology.

Transformation is Inevitable – Key Themes for Asset Managers in 2023 and Beyond

The Strategy sets out the next steps on transition planning and the UK Green Taxonomy, to ensure that green finance markets are robust. The Strategy also sets out how the UK Government is working with a range of public financing bodies to commercialise and finance green technologies. The Strategy also incorporates both nature and climate adaptation into the UK’s green finance framework. It highlights the fact that a new nature markets framework has also been published, which explains how the UK aims to develop high-integrity markets, enabling farmers and land managers to attract investment into natural capital. Finally, the Strategy sets out how the UK Government aims to accelerate the shift to a green global financial system and catalyse green financing globally.

The Strategy sets out the next steps on transition planning and the UK Green Taxonomy, to ensure that green finance markets are robust. The Strategy also sets out how the UK Government is working with a range of public financing bodies to commercialise and finance green technologies.
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The Strategy also incorporates both nature and climate adaptation into the UK&rsquo;s green finance framework. It highlights the fact that a new nature markets framework has also been published, which explains how the UK aims to develop high-integrity markets, enabling farmers and land managers to attract investment into natural capital.
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Finally, the Strategy sets out how the UK Government aims to accelerate the shift to a green global financial system and catalyse green financing globally.

Published on 30 March 2023, the 2023 Green Finance Strategy (the Strategy) represents the latest policy document developed by HM Treasury, the new Department for Energy and Security and Net Zero, and the Department for Environment, Food and Rural Affairs.

Mobilising Green Investment - the UK Government’s 2023 Green Finance Strategy

Joining jurisdictions around the world, the UK has recognised that disrupting technologies and failures in the cryptoasset arena have highlighted the need for regulation, not just to protect investors and maintain financial stability, but also to recognise the changes technology has made to the financial services sector. In February 2023, the UK became one of the latest jurisdictions to set out plans to regulate cryptoassets and pave the way for a central bank digital currency. As with other jurisdictions, the aim is to regulate the use of disruptive technologies, thereby ensuring that new products fit into the current regulatory framework. This is a rapidly developing arena. Indeed, between writing this article and its publication, further rules and guidance have been issued by IOSCO, the SFC, and the International Institute for the Unification of Private Law.

Joining jurisdictions around the world, the UK has recognised that disrupting technologies and failures in the cryptoasset arena have highlighted the need for regulation, not just to protect investors and maintain financial stability, but also to recognise the changes technology has made to the financial services sector.&nbsp;
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In February 2023, the UK became one of the latest jurisdictions to set out plans to regulate cryptoassets and pave the way for a central bank digital currency.
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As with other jurisdictions, the aim is to regulate the use of disruptive technologies, thereby ensuring that new products fit into the current regulatory framework.
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This is a rapidly developing arena. Indeed, between writing this article and its publication, further rules and guidance have been issued by IOSCO, the SFC, and the International Institute for the Unification of Private Law.

In February 2023, the UK became one of the latest jurisdictions to set out plans to regulate cryptoassets and pave the way for a central bank digital currency.

Digital Assets: The Evolving Regulatory Environment

The EC request also sought input on the definition of greenwashing in the financial sector, on the risks greenwashing can pose to investors and financial markets, on the implementation of sustainable finance policies aimed at preventing greenwashing, as well as on potential improvements to the regulatory framework. Following feedback received from the 2022 request for input, the EBA, EIOPA and ESMA published their respective Progress Reports on Greenwashing on the Financial Sector (the Reports) on 1 June 2023. The purpose of the Reports is to support a better understanding of greenwashing and to assess which areas of the sustainable investment value chain are more exposed to greenwashing risks.

The EC request also sought input on the definition of greenwashing in the financial sector, on the risks greenwashing can pose to investors and financial markets, on the implementation of sustainable finance policies aimed at preventing greenwashing, as well as on potential improvements to the regulatory framework.
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Following feedback received from the 2022 request for input, the EBA, EIOPA and ESMA published their respective Progress Reports on Greenwashing on the Financial Sector (the Reports) on 1 June 2023.
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The purpose of the Reports is to support a better understanding of greenwashing and to assess which areas of the sustainable investment value chain are more exposed to greenwashing risks.

In May 2022, the European Commission (EC) issued a “Request for input related to greenwashing risks and the supervision of sustainable finance policies” to three European Supervisory Authorities (EBA, EIOPA and ESMA - the ESAs).

ESMA Published its Progress Report on Greenwashing

On 13 June 2023, the European Commission (EC) published the Sustainable Finance Package (the Package). In the EC’s view, the purpose of the Package is to ensure that the EU sustainable finance framework continues to support companies and the financial sector, while encouraging the private funding of transition projects and technologies.

<div>On 13 June 2023, the European Commission (EC) published the Sustainable Finance Package (the Package).</div>
<div>&nbsp;</div>
<div>In the EC&rsquo;s view, the purpose of the Package is to ensure that the EU sustainable finance framework continues to support</div>
<div>companies and the financial sector, while encouraging the private funding of transition projects and technologies.</div>

Next Steps for the European Sustainable Finance Package

On 25 September 2023 the UK&rsquo;s Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA) published consultation papers, setting out their proposals to boost diversity and inclusion to support healthy work cultures, reduce groupthink and unlock talent.
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The FCA states that the measures also aim to enhance the safety and soundness of firms and improve understanding of diverse consumer needs, and that increased diversity and inclusion in regulated financial services firms can deliver better internal governance, decision making and risk management.
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The FCA adds that the proposals include new rules and guidance to make clear that misconduct such as bullying and sexual harassment poses a risk to healthy firm culture. It says its guidance will help ensure firms can take decisive and appropriate action against employees for such behaviour.
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UK Regulators Consult on Measures to Boost Diversity and Inclusion in Financial Services

The Netherlands, like other jurisdictions, face challenges resulting from an aging population, hence the need for the new Wtp. The Wtp entered into force on 1 July 2023, and a transition period means that social partners, employers and pension providers will have until 1 January 2028 to amend pension schemes. The aim of the Wtp is to make corporate pensions more sustainable and workers with a company pension scheme will no longer face certainty in how much pension they will receive, as members will pay into individual accounts, with income levels more dependent on investment returns and individual contributions.

The Netherlands, like other jurisdictions, face challenges resulting from an aging population, hence the need for the new Wtp.
The Wtp entered into force on 1 July 2023, and a transition period means that social partners, employers and pension providers will have until 1 January 2028 to amend pension schemes.
The aim of the Wtp is to make corporate pensions more sustainable and workers with a company pension scheme will no longer face certainty in how much pension they will receive, as members will pay into individual accounts, with income levels more dependent on investment returns and individual contributions.

Pension Reform In The Netherlands — ‘Wet Toekomst Pensioenen’ 

The FCA states that PS23/16 contains its final rules and guidance to, amongst other things, improve trust and transparency to the market for sustainable investment products and help consumers to navigate the market for sustainable investment products.
The FCA adds that the package of measures contained in PS23/16 put consumers at its heart and was tested with over 15,000 people. It also follows the UK regulators&rsquo; Financial Lives Survey, which highlighted that a significant majority of adults surveyed would like to invest in a way that protects the environment or has a positive social impact.
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On 28 November 2023, the UK&rsquo;s Financial Conduct Authority (FCA) published its Policy Statement (PS23/16) &lsquo;Sustainability Disclosure Requirements (SDR) and Investment Labels&rsquo;.

UK FCA Confirm Sustainability Disclosure and Labelling Regime

<h4>Increasingly, regulators globally have become concerned about two aspects of open-ended funds&rsquo; liquidity. Firstly, that funds do not trade with investors in a manner that reflects the liquidity of their underlying portfolios and secondly, that the underlying portfolios are not as liquid as the regulators would expect them to be.</h4>
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This has led jurisdictions and international bodies to question the rules that they have, to date, applied.
In this article we look at the current work being undertaken to try and solve the problem of liquidity mis-match in open-ended collective investment schemes.
We look at the work undertaken by global bodies such as IOSCO and the FSB, as well as domestic regulators in Europe, The US, UK and Asia.
&nbsp;

Increasingly, regulators globally have become concerned about two aspects of open-ended funds&rsquo; liquidity. Firstly, that funds do not trade with investors in a manner that reflects the liquidity of their underlying portfolios and secondly, that the underlying portfolios are not as liquid as the regulators would expect them to be.

Fund Liquidity: Still a Global Cause for Concern

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Back in October 2021, the UK Government announced, at COP26, its intention &ldquo;to become the world&rsquo;s first net-zero aligned financial centre and announced that it would launch the Transition Plan Taskforce (TPT), with the mission of producing a gold standard Disclosure Framework for transition plans.&rdquo;
On 9 April 2024, the TPT launched its final set of transition plan resources which amongst other documents, included sector-specific transition plan guidance for asset managers and asset owners, amongst other sectors.
Learn about the TPT Asset Managers Sector Guidance, its potential cross-over with the Asset Owner Sector Guidance, and why these are relevant to your asset management business.

Back in October 2021, the UK Government announced, at COP26, its intention &ldquo;to become the world&rsquo;s first net-zero aligned financial centre and announced that it would launch the Transition Plan Taskforce (TPT), with the mission of producing a gold standard Disclosure Framework for transition plans.&rdquo;

Transition Planning for Asset Managers

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The UK Financial Conduct Authority (FCA) is consulting on extending Sustainability Disclosure Requirements (SDR) and investment labels regime to portfolio management services as part of a Consultation Paper (CP24/8) &lsquo;Extending the Sustainability Disclosure Requirements (SDR) regime to Portfolio Management&rsquo;, which was published on 23 April 2024.
The FCA estimates that its proposals will impact around 400 firms providing portfolio management services, consisting of a population of wealth managers, private banks, and asset managers (which collectively the FCA refer to as &ldquo;firms&rdquo; in CP24/8). All of which can operate different business models and different services.
The FCA says that how the rules are to be applied, depends on the nature of each firm&rsquo;s business model.

The UK Financial Conduct Authority (FCA) is consulting on extending Sustainability Disclosure Requirements (SDR) and investment labels regime to portfolio management services as part of a Consultation Paper (CP24/8) &lsquo;Extending the Sustainability Disclosure Requirements (SDR) regime to Portfolio Management&rsquo;, which was published on 23 April 2024.
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UK FCA Proposes Extending SDR to Portfolio Management

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The Alternative Investment Fund Managers Directive (AIFMD) was introduced in response to well publicised failures in governance that impacted European Union (EU) funds during the global financial crisis of 2008-09.
The aim of the AIFMD was to ensure minimum regulatory standards for the operation of management companies responsible for funds available for investment in the EU and not captured by the pre-existing Undertakings for Collective Investment in Transferable Securities (UCITS) Directive.
Over time the AIFMD has evolved to include fund specific regulation with the introduction of new rules governing loan originating alternative investment funds (AIFs).
In this article we explore these new fund rules, as well as some of the other changes to both the AIFMD and UCITS Directive, introduced by the amending directive that came into force on 15 April 2024.
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The Alternative Investment Fund Managers Directive (AIFMD) was introduced in response to well publicised failures in governance that impacted European Union (EU) funds during the global financial crisis of 2008-09.

The Changing Face of EU Investment Fund Regulation   

There is currently a global trend towards reducing settlement cycles with the general aim of lowering market risk, providing more stability, improving liquidity, and streamlining operations.
Some market participants have also considered the future landscape of &lsquo;atomic settlements&rsquo;, otherwise described as T+0.
In this article we start with the lead up to, and the point at which the U.S. changes to T+1 settlement went live. Following that, we look at the outcome of that change.
Finally, we look at what other jurisdictions such as the European Union, the UK and Australia may be proposing further down the line.

There is currently a global trend towards reducing settlement cycles with the general aim of lowering market risk, providing more stability, improving liquidity, and streamlining operations.
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The Sliding Scale for Global Settlement Cycles

Securities Services

Services

There are various definitions of greenwashing, but in the EU the ESAs have provided a common understanding of what this means.
Being a practice where sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services.
The European Securities and Markets Authority (ESMA) and the UK&rsquo;s Financial Conduct Authority (FCA) have therefore taken action,&nbsp;with the aim that fund managers are, amongst other things, acting honestly and fairly when marketing sustainable funds to investors.

There are various definitions of greenwashing, but in the EU the ESAs have provided a common understanding of what this means.&nbsp;

Sustainability-Related Terms in EU and UK Funds’ Names

Article

On 31 December 2020, the United Kingdom of Great Britain and Northern Ireland (UK) ceased to be part of the European Economic Area (EEA) UCITS cross-border passporting regime.
In this article we look at the impact that decision had on EEA funds intending to market to UK investors, and the moves UK authorities have made to transition to a new regime for overseas funds operating in the UK.

The Overseas Funds Regime – The New Route to Market EEA UCITS Funds in the UK

The New Route to Market EEA UCITS Funds in the UK

On 31 December 2020, the United Kingdom of Great Britain and Northern Ireland (UK) ceased to be part of the European Economic Area (EEA) UCITS cross-border passporting regime.

The Overseas Funds Regime

Australia, along with other countries, is a member of the International Platform on Sustainable Finance (IPSF).
The IPSF offers a multilateral forum for policymakers in charge of developing sustainable finance regulatory measures. Its stated objective is to scale the mobilisation of private capital towards sustainable investments.
This article looks at how the Australian Government lays out its plans for a Sustainable Finance Roadmap, alongside the latest international developments in this space.

Australia, along with other countries, is a member of the International Platform on Sustainable Finance (IPSF).

Australia’s Sustainable Finance Roadmap Adds to the Latest International Developments

The financial services industry has often been at the forefront when it comes to the implementation of new technologies. From the rise of compact computers in the 1970s and the development of software packages that improved accuracy and efficiency, through the advent of the internet and home computing, to the dominance of mobile apps, the financial services industry is frequently in the vanguard.
So far, each innovation has been an incremental step, adapting existing processes to an evolving environment: paper ledgers become spreadsheets, cash and cheques are replaced by chip and pin, in-turn replaced by touch to pay. The latest technologies promise not an incremental step but &ldquo;disruption&rdquo;, tearing up the existing ways of doing things and replacing them with new tech that promises to be better, smarter, faster.
In this e-briefing we look at the latest global developments in the areas of fund tokenization, with contributions from Citi colleagues from around the world.

Click below to download the e-briefing. 

The financial services industry has often been at the forefront when it comes to the implementation of new technologies. From the rise of compact computers in the 1970s and the development of software packages that improved accuracy and efficiency, through the advent of the internet and home computing, to the dominance of mobile apps, the financial services industry is frequently in the vanguard.

The Path to Fund Tokenization – Global Developments

Following its publication in the Official Journal of the European Union on 27 December 2022, the Digital Operational Resilience Act (DORA) and the DORA Amending Directive entered into force on 16 January 2023 and will apply from 17 January 2025.DORA sets uniform requirements for the security of network and information systems of companies and organisations operating in the financial sector as well as critical third parties which provide Information Communication Technology (ICT)-related services to them, such as cloud platforms or data analytics services.DORA creates a regulatory framework on digital operational resilience whereby all firms need to make sure they can withstand, respond to and recover from all types of ICT-related disruptions and threats. These requirements are homogenous across all EU member states. The core aim is to prevent and mitigate cyber threats.In this e-briefing, we look at the background to DORA, the regulation itself, and the current status of the level two and three proposals as we approach DORA’s application in January 2025.

DORA: The EU’s New Regulatory Framework on Digital Operational Resilience

Following its publication in the Official Journal of the European Union on 27 December 2022, the Digital Operational Resilience Act (DORA) and the DORA Amending Directive entered into force on 16 January 2023 and will apply from 17 January 2025.

Enabling Issuers and Investors across the entire investment lifecycle.

e-briefing

On 15 March 2025, the Financial Accountability Regime (FAR) will be extended to the insurance (including their non-operating holding companies) and superannuation industries in Australia, joining the banking industry, where the FAR has applied since 15 March 2024.
For the insurance and superannuation industries, the extended regime will impose a strengthened responsibility and accountability framework to improve the risk governance cultures of entities regulated by the Australian Prudential Regulation Authority (APRA), their directors and most senior executives.
In this e-briefing, we look at the latest developments, including APRA and the Australian Securities and Investments Commission's July information paper on 'FAR: Information for accountable entities.'

Click below to download the e-briefing.

On 15 March 2025, the Financial Accountability Regime (FAR) will be extended to the insurance (including their non-operating holding companies) and superannuation industries in Australia, joining the banking industry, where the FAR has applied since 15 March 2024.

Not So ‘Far’ Out – The Extended Financial Accountability Regime in Australia

e-briefing 

In recent years, Artificial Intelligence (AI) and Generative AI (Gen AI) have transitioned from the realm of science fiction to reality.
The concept of intelligent machines can be traced back centuries. But true AI development really started with Alan Turing&rsquo;s Test for computer intelligence and neural networks in the 1950s.
Fast forward to 2024 - where we are now familiar with many Gen AI powered tools that are on the market with capabilities to generate text, write code, create audio, make images and video on-demand.
Whilst society appears to be assimilating the use of such tools into everyday life, this is not necessarily the case for financial services firms, as there are certain regulatory and ethical guardrails to be followed.
In this e-briefing we look at Gen AI, why it matters, its potential, some use cases, alongside the&nbsp; evolving global regulatory environments.

In recent years, Artificial Intelligence (AI) and Generative AI (Gen AI) have transitioned from the realm of science fiction to reality.

Doing the Right Thing for Business and Society - Generative AI

Data. In everyday life we are constantly consuming it. On a conscious level, we are trying to make use of that information for the task at hand, discounting the inessential and focusing on the essential.&nbsp;In business, the collection, storage, and use of data follows the same principles. An approach which aims to harness data and technology in perfect harmony.&nbsp;Large volumes of data are valuable. But as data volumes, processing and consumption demands continue to rise exponentially, businesses that manage data are exposed to a host of challenges.&nbsp;In this e-briefing we look at how firms such as asset managers, insurers, and banks, along with regulators, must therefore consider these ‘flip sides’ and continuously determine how to overcome these challenges, whilst making the best use of their data.<o:p> </o:p>

Data. In everyday life we are constantly consuming it. On a conscious level, we are trying to make use of that information for the task at hand, discounting the inessential and focusing on the essential.<o:p></o:p><o:p> </o:p>

The Flip Sides of Data – A Strategic Asset and a Potential Risk

<h5>On 19 December 2024, the UK Financial Conduct Authority (FCA) published its consultation CP24/30: A New Product Information Framework for Consumer Composite Investments (CCI CP).</h5>&nbsp;Under the current rules for the PRIIPs KID and UCITS KIID, introduced when the UK was still in the European Union, people buying investments like investment funds are supplied with standardised documents covering prescribed information.But now the FCA is proposing to replace the regimes it onshored with a system which is intended to be simpler and flexible, and tailored to the UK.Under the proposals, new product information requirements should help consumers understand the products they are buying while giving firms flexibility to innovate. In this e-briefing we look at the FCA’s proposals in more detail.

On 19 December 2024, the UK Financial Conduct Authority (FCA) published its consultation CP24/30: A New Product Information Framework for Consumer Composite Investments (CCI CP).<o:p></o:p>

The FCA Moves Forward with its New Product Information Regime – Consumer Composite Investments

On 11 October 2027, the financial markets of the European Union (EU), United Kingdom (UK), and Switzerland and Liechtenstein, will, or are considering moving to a T+1 settlement cycle, bringing them into line with other financial centres that have already commenced or completed the move.With both EU and UK governments calling for greater inward investment, either to boost growth, finance digital, green and social transition, or just encourage greater retail investment in securities markets, reducing the time it takes to settle trades is seen as key to meeting these aims.&nbsp;In reducing the settlement cycle, markets in the EU, UK, and Switzerland and Liechtenstein will join jurisdictions already operating T+1, such as China, India, the United States and Canada.&nbsp;Following extensive consultation and industry feedback, the UK government and European Commission plan to amend their respective versions of the Central Securities Depository Regulation to provide legal certainty so as to ensure T+1 settlement is implemented on 11 October 2027.&nbsp;This date has been selected to give market participants time to update and adapt systems and processes.&nbsp;Joining the EU and UK, the Swiss Securities Post-Trade Council (swissSPTC) has also recommended that the transition to a T+1 Settlement Cycle for the domestic markets in Switzerland and Liechtenstein should occur in October 2027. SIX, the operator of the Swiss exchange, has committed to gaining adjustments to the Rule Book of SIX Swiss Exchange to accommodate the change of the settlement cycle at the appropriate time.In this article we consider each of the European proposals in more detail in terms of background leading up to the proposals, suggested approaches, along with actions still to be taken.

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Money laundering continues to be a significant global challenge for financial institutions, especially as criminals adopt increasingly sophisticated methods to launder the proceeds of crime.In 2025 and beyond, financial institutions must continue to adapt to evolving regulatory pressures, and emerging crime trends, as well as further consider technological solutions to mitigate these risks.In this article we look at some of the most recent legislative changes which firms should be aware of.

Money laundering continues to be a significant global challenge for financial institutions, especially as criminals adopt increasingly sophisticated methods to launder the proceeds of crime.

Anti-money Laundering Evolution in 2025 and Beyond

If you are a parent, you will be only too familiar with the childish refrain, ‘are we there yet’ – often repeated on any journey, regardless of length. The same may be heard as regards sustainability regulation, which has been at the forefront of regulators agendas for the last six years or so.This article looks to answer that question, ‘Are we there yet?’&nbsp;Well, the answer to that specific question is still ‘no’, and to be able to expand on why, we need to root our journey back in 2024 and project forwards to 2025 and beyond.Our latest article looks at regulations which are due to enter key milestones during 2025, along with what is still to come in terms of further regulatory developments, with the potential to impact a variety of industry segments.By nature of its subject matter, our latest piece is broad in terms of coverage looking at:<ul style="list-style-type:disc;"><li>ESG Ratings Regulations,</li><li>Global sustainability reporting,</li><li>Ongoing developments in the EU and UK around the potential to simplify sustainability regimes such as the EU SFDR, UK SDR, and due diligence obligations for the entire value chain,</li><li>ESG risks,</li><li>Residual ESG considerations arising from the use of AI and digital assets,</li><li>Early indications for potential ESG regulatory changes in the US,</li><li>Net zero and transition planning, and</li><li>An evolving focus on nature.&nbsp;</li></ul>As companies move through 2025/2026, we look at how the ESG landscape is characterised by both challenges and opportunities.&nbsp;Companies must remain vigilant and adaptable, embracing integrated and strategic approaches to ESG and sustainability (including in relation to the terminology used) to ensure business resilience.&nbsp;By staying informed and proactive, organisations can navigate the complexities of ESG, and sustainability matters and position themselves for long-term success in an ever-evolving global environment. &nbsp;

If you are a parent, you will be only too familiar with the childish refrain, ‘are we there yet’ – often repeated on any journey, regardless of length. The same may be heard as regards sustainability regulation, which has been at the forefront of regulators agendas for the last six years or so.

Sustainability Regulations: Are We There Yet?

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