ESMA published a call for evidence on digital finance that aims to gather relevant information on issues such as value chains, platforms, and groups’ provision of financial and non-financial services. ESMA will consider the information received through this call for evidence when drafting its advice to EC. EC aims to address the challenges and risks associated with digital transformation by proposing, where relevant, adaptations to the existing legislative framework by mid-2022. The call for evidence is open until August 01, 2021 and ESMA, along with the other ESAs, will deliver a report to EC by January 31, 2022.
EC had, in February 2021, set out a request for technical advice to ESAs on three main issues: the growing fragmentation of value chains in finance, digital platforms, and groups combining financial and non-financial activities. ESAs are expected to assess the regulatory and supervisory challenges brought by these developments and the way in which they could be addressed. ESMA is seeking feedback from external stakeholders, on the following, to inform its work on the matter:
- More fragmented or non-integrated value chains. The call for evidence aims to collect evidence on new material developments in the evolution and fragmentation of value chains arising as a result of financial firms increasingly relying on third parties for the delivery of their services and of technology companies entering financial services.
- Platforms and bundling of various financial services. The call for evidence is intended to help ESMA collect insights on the use of digital platforms in the EU the extent to which this phenomenon introduces new risks and/or create regulatory and supervisory challenges.
- Risks of groups combining different activities. The call for evidence aims to collect evidence on whether large technology companies as mixed-activity groups should be supervised specifically. It also intends to collect evidence on how interdependencies, , and potential risks stemming from these, within the groups can be identified and addressed as well as on how supervisory cooperation can be improved for these groups.
The call for evidence is of interest to financial firms relying on third parties, in particular technology firms, to fulfil critical or important functions. It is also of interest to third-parties, technology firms, platforms marketing or providing access to different financial services, mixed activity groups combining financial and non-financial activities, and investors.
Comment Due Date: August 01, 2021
Keywords: Europe, EU, Banking, Securities, Digital Finance, Fintech, Digital Platforms, Regtech, Bigtech, ESAs, ESMA, EC
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