We are pleased to share the first edition of ICMA’s newsletter focusing on our work from a FinTech and market electronification perspective. We intend to bring our members up to speed on our cross-cutting technology initiatives across our key market areas and provide insights into regulatory updates, consultation papers, news and other publications, and upcoming meetings and events.
ICMA FinTech initiatives and workstreams
ICMA FinTech Advisory Committee (FinAC)
The FinTech Advisory Committee held its inaugural meeting on 21 January 2020 followed by further (virtual) meetings on 24 March and 26 May 2020. It is chaired by Armin Peter, Global Head of Syndicate at UBS and previously chair of the ICMA Board Sub-Group on Technology, and brings together front office, middle/back office, legal and technology expertise across ICMA’s core areas, representing corporate and public sector issuers, investors, banks, market infrastructures and law firms.
In line with ICMA’s mission statement to promote resilient and well-functioning international debt capital markets, the purpose of the ICMA FinTech Advisory Committee is to provide guidance on ICMA’s engagement on FinTech across primary, secondary, repo and collateral markets, as well as sustainable finance. See our latest quarterly report article on the FinAC.
Common Domain Model (CDM) for repo and bonds
ICMA is cooperating with ISDA to extend the development of the Common Domain Model (CDM) to include repo and, by extension, outright bond transactions: a single, common digital representation of securities trade events and lifecycles intended to enhance standardization and facilitate interoperability across firms and platforms. The development of the CDM for all financial markets and securities will be critical in creating cross-industry efficiencies while easing the development and adaptation of new technologies.
See our latest Quarterly Report article on our CDM repo workshops. Further information, including supporting materials from the workshops and a webinar can be found here. If you would like to be involved in this cross-industry initiative, please get in touch.
ICMA FinTech resources
Review of FinTech Mapping Directory for repo and cash bond operations (ongoing)
ICMA is conducting a review of the ERCC Ops FinTech Mapping Directory for repo and cash bonds. The directory currently lists over 120 solutions and is divided into 10 categories comprising of collateral management, corporate actions, exposure agreement, intraday liquidity monitoring and reporting, matching, confirmation & allocation, reconciliations but also ancillary areas such as static data and SSI, workflow and communication and KYC onboarding.
Members are encouraged to flag any new solutions currently used that are not yet covered by the directory. Solution providers are also encouraged to send updated details and flag new initiatives – ICMA has initiated this review with listed vendors. Please contact us for further details.
Primary markets technology mapping directory
ICMA’s primary markets technology directory currently lists a total of 30 solutions and emerging platforms which have conducted live pilots. It explains at what stage of the issuance process they can be used and whether they are aimed at underwriters, investors, issuers or others and also provides information on the scope of debt instruments covered and to what issuance methods the technology solutions apply.
Secondary markets ETP directory
ICMA’s mapping directory of Electronic Trading Platforms (ETPs) currently lists a total of 43 electronic execution venues, Order Management Systems (OMS) and information networks. It is intended to help market participants understand what execution and non-execution venues are available for cash bonds.
Repo trading technology directory
In light of increasing electronification of repo markets, ICMA has conducted a mapping exercise of electronic repo trading platforms and other technology solutions. Find out more about available solutions and for repo trading (D2D or D2C, for instance), product scope, as well as differences in trading protocols, clearing and collateral configurations. The directory also provides additional details such as regulatory status, market identifier codes (MIC) and other services on offer.
Any further suggestions on potential technology solutions for any of the directories are welcome.
Updates to DLT regulatory directory
ICMA’s DLT regulatory directory provides a non-exhaustive overview of recent DLT regulatory guidance, legislative initiatives, as well as related strategy papers and publications in selected jurisdictions across Europe, North America, and Asia-Pacific. Several updates are listed below.
- 19 May 2020: H.R.6938 introduced in US House of representatives, requiring the Secretary of Commerce and the Federal Trade Commission to conduct a study on blockchain technology, and for other purposes.
- 25 April 2020: China's new national blockchain system, the Blockchain Service Network (BSN) officially launched.
- 21 April 2020: EU Blockchain Observatory and Forum released its publication Convergence of Blockchain, AI And IoT.
- 6 March 2020: AMF released Position DOC-2020-02 Market infrastructure, Clarifications regarding the notion of trading venue, applicable in particular to financial instruments registered in a distributed ledger.
- 27 February 2020: AMF published its review and analysis of the application of financial regulations to security tokens.
- February 2020: Australia's Department of Industry, Science, Energy and Resources released its National blockchain roadmap.
- 13 January 2020: OECD formed a high-level expert group on blockchain to provide advice on its work on blockchain and other distributed ledger technologies; this will include the development of high-level blockchain policy principles.
New FinTech applications in bond markets
Applications of distributed ledger technology, artificial intelligence/machine learning, big data analytics or cloud computing have significant potential to alter the lifecycle of bonds, from issuance, trading to settlement, and impact the functioning of financial markets. Recent initiatives in ICMA’s listing of new applications in bond markets, which are taken from public sources include:
20 May 2020: Societe Generale performed the first financial transaction settled with a Central Bank Digital Currency in an experimentation process launched by the Banque de France.
18 May 2020: Billon and Raiffeisen Bank International to pilot Digitized National Currency.
18 May 2020: DTCC unveils proposals to explore further digitalization in the public & private markets.
5 May 2020: OCC selects Axoni to modernize securities lending infrastructure.
Members are encouraged to flag relevant consultations and express interest in contributing to potential consultation responses.
28 May 2020: IOSCO consults on outsourcing principles to ensure operational resilience. The consultation period ends 1 October 2020.
14 April 2020: FSB published a consultation paper with 10 high-level recommendations to address regulatory, supervisory and oversight challenges raised by “global stablecoin” arrangements. Deadline for responses 15 July 2020.
3 April 2020: EC released its consultation on a new digital finance strategy for Europe / FinTech action plan. Deadline for responses 26 June 2020.
12 March 2020: Bank of England published its discussion paper on Central Bank Digital Currency (CBDC). Deadline for responses 12 June 2020.
9 March 2020: FCA Call for Input - Accessing and using wholesale data. Deadline for responses 1 October 2020.
Relevant publications and news items
28 May 2020: Monetary Authority of Singapore (MAS) announced the first phase of the Veritas initiative - a framework for financial institutions to promote the responsible adoption of Artificial Intelligence and Data Analytics (AIDA) - will commence with the development of fairness metrics in credit risk scoring and customer marketing.
22 May 2020: World Economic Forum’s Global Blockchain Council published its Presidio Principles: Foundational Values for a Decentralized Future (‘Blockchain Bill of Rights’), which provides recommendations for applications built on blockchain-based systems.
13 May 2020: ICMA Podcast: FinTech, technology risks and the COVID-19 crisis. ICMA speaks to Douglas Arner, the Kerry Holdings Professor in Law at the University of Hong Kong and co-author of the paper Digital Finance & the COVID-19 Crisis.
13 May 2020: ICMA Podcast: Electronic signings - an English law perspective in the time of COVID-19. ICMA has teamed up with Clifford Chance to make available a Clifford Chance podcast on electronic signings from an English law perspective in the time of COVID-19.
5 May 2020: Bank of Ghana announced establishment of FinTech and Innovation Office to drive the Bank’s cash-lite, e-payments, and digitisation agenda.
27 April 2020: PBOC announced (in Chinese) it will support its pilot program of regulations on fintech innovation, first launched in Beijing in December 2019, to expand to the municipalities of Shanghai and Chongqing, cities of Shenzhen, Hangzhou and Suzhou, as well as the Xiongan New Area.
24 April 2020: ICMA Webinar: FinTech developments in the debt capital markets and potential implications for Asia Pacific. Access the recording and the presentation here.
21 April 2020: De Nederlandsche Bank (DNB) published its report on Central Bank Digital Currency: Objectives, preconditions and design choices.
20 April 2020: European Investment Bank (EIB) published its report on the investment and adoption of digital technologies.
17 April 2020: People's Bank of China announced (in Chinese) that it intends to roll out internal tests of its national digital currency in Shenzhen, Suzhou, Xiong’An, Chengdu and at the Winter Olympics.
14 April 2020: South Africa's Intergovernmental Fintech Working Group (IFWG) released its position paper on crypto assets.
13 April 2020: Chinese Ministry of Industry and Information Technology (MIIT) published a notice (in Chinese) on the establishment of a technical committee comprising 15 organisations responsible for devising national standards for blockchain and distributed ledger technology.
8 April 2020: ICMA Podcast: The impact of COVID-19 on the Chinese capital market and digital economy. Esmond Lee, CEO of Euroclear Bank Hong Kong Branch, discusses the outlook of the Chinese economy and capital market in light of COVID-19; the measures implemented by Chinese regulators; and some inspirational thoughts on a post COVID-19 world of digital economy.
8 April 2020: Monetary Authority of Singapore (MAS) launched a S$125 Million Package for Financial Institutions and FinTech Firms to Strengthen Long-Term Capabilities.
7 April 2020: ESMA’s Financial Innovation Standing Committee (FISC) published its Terms of Reference covering the responsibilities and tasks of the group and the Procedures for ESMA groups (ESMA/2011/BS/236rev2) set out the rules concerning its structure, governance and working methods.
7 April 2020: South Africa’s Intergovernmental Fintech Working Group (IFWG) released a media statement on the launch its Innovation Hub to respond to changes in the financial sector driven by financial technology (fintech) and to promote responsible innovation in the sector.
6 April 2020: ICMA Quarterly Report: Second Quarter.
3 April 2020: South African National Blockchain Alliance (SANBA) was officially launched by the DG of the Department of Science and Innovation (DSI).
18 March 2020: ICMA submitted its response to the EC consultation on an EU framework for markets in crypto-assets (security tokens).
Summary of ICMA FinTech Resources
Primary markets technology mapping directory
Electronic Trading Platform (ETP) mapping directory
Repo Trading Technology Directory
ICMA Ops FinTech mapping directory for repo and cash bonds
Distributed Ledger Technology (DLT) Regulatory Directory
New FinTech applications in bond markets