International securities regulators are to establish a 'Fintech Network' to share information and knowledge on emerging technologies and risks to the financial system.
At its annual meeting in Budapest this week, the International Organisation of Securities Commissions (Iosco) earmarked the challenges of fintech and digitilsation as one of four top areas of focus for the coming year.
The global policy body last year released a financial technology research report which highlighted the growing intersection between fintech and securities markets across a number of critical business areas, including financing platforms, robo-advisory services, innovations in bond trading and applications of distributed ledger tech.
It noted the way in which regulators are adopting differing tactics to deal with emerging fintech platforms, from setting up dedicated fintech offices, creating sandbox frameworks, and opening labs and accelerators.
The divergence in views was brought to the fore this week when newly-established SEC Commissioner Hester Peirce took a swipe at the global trend for establishing fintech sandboxes, arguing that they place regulators and the regulated too close together and instead calling for an arms-length relationship with non-bank firms.
The aim of the Fintech Network is to pull together the different strands and reach a consensus on the best ways to approach the market without stifling innovation. Iosco says the Network will act as a forum for regulators to share experiences and exchange information on regulatory issues, trends, and emerging risks.
A similar tactic is being adopted in an attempt to clarify the regulatory approach to Initial Coin Offerings (ICOs), with the development of a Support Framework to assist members as they consider how to address the domestic and cross-border issues that could impact investors or consumer protection.
The European Union General Data Protection Regulation (GDPR) and its impact on Iosco's Multilateral Memorandum of Understanding (MMoU) on cooperation and exchange of information was identified as a potential fly in the ointment. Pointing out that the MMoU is the primary instrument used by securities regulators to combat cross-border misconduct in financial markets, Iosco says it will continue to engage with European authorities to address any issues that are identified as the GDPR is implemented.
Ashley Alder, chair of the Iosco Board, says: “Iosco members have taken important steps this week to advance Iosco´s priority work in focus areas such as market resilience, financial technologies, and information sharing among securities market regulators, while addressing the biggest risks to investor protection, market integrity and financial stability.”