MFA filed our response to the European Commission in response to its consultation on FinTech: A More Competitive and Innovative European Financial Sector. In our letter, we provide comments with respect to automated advice and execution, distributed ledger technology (“DLT”), RegTech, and information/cyber security.
Regarding automated advice and execution, our letter differentiates “robo-advice” for retail investors from how investment managers use technology and algorithms with respect to private funds. Our letter also notes that MiFID II already addresses regulation of algorithmic trading. Regarding DLT, we raise concerns for policymakers to stay engaged with network development in the areas of governance, data protection and network security. With respect to the most promising use cases of technologies for compliance purposes (RegTech), we provided recommendations for improving reporting processes, harmonizing regulatory reporting regimes, and creating a centralized database for reporting purposes. Regarding information and cyber security, we raise the need for regulators to consider the extent and degree of information collected, and the importance for high standards at both regulatory authorities and financial services firms. We cautioned that cyber standards needed to be principles-based given the speed of new and emerging cyber threats.
In our letter, we also lay out three areas where policymakers should take measures at the EU-level to facilitate the development and implementation of FinTech solutions for the asset management industry. These include:
- measures to improve governance, data protection and data security standards of exchanges and other trading venues, central counterparties, and DLT operators;
- measures to reduce anti-competitive pricing of market and other data; and
- measures to improve confidentiality and data security standards and resources of national regulatory authorities and the European Supervisory Authorities.