Featured Product

    ESMA Group Opines on Regulation of Open Banking and Digital Platforms

    July 30, 2021

    The Securities and Markets Stakeholder Group (SMSGs) published its Technical Advice to the European Securities and Markets Authority (ESMA), with respect to the European Commission (EC) request to the European Supervisory Authorities for advice on digital finance and related issues. The Advice reflects the discussion of the working group within SMSG as well as the consolidated comments and observations of the SMSG plenary. The SMSG is of the view that the digitalization of financial services should follow the principle of "same activity, same risk, same regulation." SMSG points out that digitalization has, in many instances, favored the emergence of highly concentrated competitive outcomes; it encourages regulators and supervisors to introduce appropriate regulatory safeguards to prevent the excessive concentration of market power with respect to digital platforms, to maintain competitive markets and preserve financial stability.

    The SMSG welcomes EC's recent legislative proposals for the regulation of the digital finance sphere, including the Digital Finance package of September 2020 and the Digital Markets Act (DMA) of December 2020. The SMSG agrees with EC's overall assessment that digital innovation, noting that the adoption of digital services has the potential to unlock significant benefits for financial services firms, businesses, and consumers in the European Union and could become an important enabling factor for the further integration and deepening of European capital markets. The insights gained from the aggregation and analysis of data using algorithms and, increasingly, artificial intelligence, have the potential to enhance existing products and services, and enable new, innovative offerings to the benefit of businesses and consumers. The SMSG notes, however, that the general principles of regulating the process of digitalization and the use of artificial intelligence in financial services must be observed. The SMSG also notes that the open banking blueprint established for payment services in second Payment Services Directive (PSD 2) does not readily lend itself as a template to be applied, with some modifications, to other areas of financial services. SMSG is not convinced that the ease with which PSD 2 facilitates the commercialization and commoditization of citizens’ personal data and its liberal interpretation of the concept of consent constitute best practices for the protection of citizen data. In this context, SMSG emphasized that data portability, which open banking relies on to reduce lock-in effects, is not a substitute for adequate data protection.

    SMSG notes that the financial markets, and the retail savings and investments, are much more diverse and different from the payments market and require bespoke solutions. Nonetheless, SMSG expects that major digital platform providers will continue to build up their presence in the financial markets and welcomes the EC proposal for a Digital Markets Act (DMA), which aims to regulate certain critical aspects of their activities, which would include, in particular, the intermediation of financial products and services and the provision of payment services. The DMA would invest EC with new monitoring, investigative, and enforcement powers, including the power to impose one-off fines and periodic penalty payments to sanction anti-competitive behavior by operators of core platform services (also known as gatekeepers). SMSG supports the EC proposal to subject gatekeepers to additional scrutiny. SMSG welcomes the obligation for gatekeepers to refrain from combining personal data sourced from core platform services with personal data from any other services offered by the gatekeeper or with personal data from third-party services without the express consent of the user. The Group stresses that the granularity of the "silo" approach will be critical for its effectiveness; thus, legislators should ensure that "siloing" in respect of the intermediation of investment services is maintained at least at the same level of granularity as the regulated products and services themselves.

     

    Related Link: SMSG Advice

     

    Keywords: Europe, EU, Banking, Securities, Digital Finance, SMSG, Open Banking, Digital Platforms, Digital Markets Act, Regtech, EC, ESMA

    Related Articles
    News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    News

    MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.

    January 13, 2022 WebPage Regulatory News
    News

    HKMA Extends Repayment for Trade Facilities, Consults on Crypto-Assets

    The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.

    January 12, 2022 WebPage Regulatory News
    News

    FCA Registers Securitization Repositories; PRA Issues 2022 Priorities

    The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.

    January 12, 2022 WebPage Regulatory News
    News

    EC Regulation Sets Out Methods for Measuring K-Factors Under IFR

    The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.

    January 11, 2022 WebPage Regulatory News
    News

    BIS Studies How Platform Models Impact Financial Stability & Inclusion

    The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.

    January 10, 2022 WebPage Regulatory News
    News

    CBE Issues Additional Measures to Ease Disruptions from Pandemic

    The Central Bank of Egypt (CBE) published a circular with instructions on emergency liquidity assistance to banks that are unable to meet their liquidity requirements.

    January 10, 2022 WebPage Regulatory News
    News

    ESAs Publish List of Financial Conglomerates for 2021

    The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.

    January 07, 2022 WebPage Regulatory News
    News

    APRA Licenses Two More Banks, Reduces Committed Liquidity Facility

    The Australian Prudential Regulation Authority (APRA) updated the list of authorized deposit-taking institutions, granting license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959.

    January 07, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7866