In its response, ECSDA expresses its support of technological innovation, including in the areas directly linked to CSD activities. ECSDA notes that due to the competing priorities of reducing costs, responding to margin pressure and the needs of a single access point, the borders between different business models in financial and other markets are likely to be blurred. At the same time, the need for a regulated entity which provides fundamentally important services for the economy is only likely to be enhanced.
The association expects FinTech to be of capable of reducing operational costs and increasing efficiency for the industry. ECSDA gives examples of how distributed ledgers may prove useful in order to store information on end investors, or smart contracts for the processing of corporate actions, as well as benefits of both distributed ledgers and smart contracts for management of claim procedures. However, current strictly regulated players should have equal chances to succeed in the future, and be allowed and encouraged to evolve.
The ECSDA response emphasises the following principles:
- A technology-neutral policy – companies engaged in the same activities should be subject to the same regulation.
- The need for a reflection on legal aspects of FinTech initiatives
- The global reach of new technology beyond the EU needs to be taken into account.
- The gradual development of technology will require interoperability and complementarity between new and current technology, and different new technology networks themselves.
To read the full response, click here.