24 March 2021 - We are pleased to share the latest edition of ICMA’s newsletter focusing on our FinTech and market electronification work to bring our members up to speed on the 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.
Please feel free to forward this to colleagues who are also welcome to subscribe by clicking on the Fintech box.
ICMA FinTech initiatives and workstreams
Common Domain Model (CDM) for repo and bonds
ICMA and the newly formed Steering Committee began the initial CDM modelling phase for repo and bonds earlier this month. The initial phase will be focusing on standard fixed-term repo transactions, including trade execution, clearing and settlement (and outright bond transactions). The duration of the initial phase is approx. 18 weeks, including a showcase event to demonstrate implementation of the CDM and its benefits.
Background information, including supporting materials from workshops, a webinar and a presentation at the ERCC AGM in October 2020 can be found on ICMA’s dedicated CDM webpage. Member firms who would like to contribute to this cross-industry initiative are welcome to get in touch.
ICMA FinTech Advisory Committee (FinAC)
ICMA’s FinTech Advisory Committee reconvened in its new composition on 28 January 2021. Following a call for expressions of interest to join the FinAC through ICMA’s Quarterly Report, FinTech newsletter, and committee meetings, seven new members were invited to join the committee. Additionally, three firms replaced their representatives on the committee. The full list of members can be found on ICMA’s website. The aim of the committee’s expansion was to ensure regional diversity as well as consistent engagement across ICMA’s various constituencies, and complement the committee’s subject matter expertise. Strategic priorities for 2021 are twofold: 1) Promote common data standards to enable process automation along the securities lifecycle, and 2) Tokenisation of bonds and digital currency, understanding the implications for market practice and adoption challenges. Summaries of previous FinAC meetings can be found here (under the Resources tab).
29 March 2021: Tokenisation and Central Bank Digital Currency – the impact on bond markets
Time: 11:00-12:00 CEST | 17:00-18:00 HKT | Time Zone Converter
This ICMA virtual event will focus on the tokenisation of financial assets and Central Bank Digital Currencies (CBDCs) with presentations from SIX Digital Exchange, BIS Innovation Hub and the Monetary Authority of Singapore. Featuring:
- Tim Grant, Head of Business of the SIX Digital Exchange (SDX) which is looking to become the world’s first fully regulated institutional digital asset exchange and CSD.
- Morten Bech, Head of BIS Innovation Hub Swiss Centre on Project Helvetia – settling tokenised assets in central bank money.
- Wee Kee Toh, Specialist Leader (Distributed Ledger Technology), Monetary Authority of Singapore (MAS) - DvP of digital assets and digital currencies with Project Ubin, highlighting the challenges, opportunities, and implications for international capital markets and fintech ecosystem.
The presentations will be followed by a Q&A discussion.
This virtual event is free of charge and open to all ICMA members and interested financial market participants. Register now.
ICMA FinTech resources
ICMA has recently updated the Primary markets technology directory (now 38 solutions), Fintech mapping directory (now 176 solutions) and Repo trading technology directory (now 18 solutions), following the inclusion of additional responses. The technology directories do not constitute an exhaustive list of providers in the market. Relevant providers that are not yet covered by the directories and wish to join are very welcome to do so.
FinTech regulatory roadmap
ICMA continues to update its FinTech regulatory roadmap, highlighting relevant developments coming up over the next few years. The timeline draws upon key milestones presented by regulators and national authorities, and is broken down by national, EU and global initiatives. Recent updates to the roadmap include:
- 18 March 2021: Australian Select Committee on Financial Technology and Regulatory Technology to present its final report on or before 30 October 2021.
- 26 February 2021: IOSCO to publish final report on the Use of Artificial Intelligence and Machine Learning by Market Intermediaries and Asset Managers in Q2 2021.
Any feedback or flagging of items to include are very welcome. Please contact us here.
22 March 2021: A buyside view: bond pricing distribution today
ICMA’s Liz Callaghan talks to Ricky Goddard, Head of trading at Schroders, about current bond pricing and axe distribution practices in the EU bond markets and the challenges that the market faces today. They discuss the importance of standardising axe information, which is the term commonly used to advertise buy or sell bond interests, the role of electronic & technology solutions in its distribution and the obstacles in achieving good quality and accurate bond pricing/axe data.
Check the ICMA Media Library for more webinars and podcasts.
Primary Market Financial Technology - Livestreamed
This new ICMA Education course is designed to provide participants with an accessible review of the role of technology in the primary markets, both now and in the future. Registrations are now open for live sessions in June.
Members are encouraged to flag relevant consultations and express interest in contributing to potential consultation responses.
12 March 2021: ICMA submitted its response to ESMA’s consultation on algorithmic trading.
Relevant publications and news items
22 March 2021: EU Parliament Economic and Monetary Affairs (ECON) Committee published its draft report on the EU Commission's proposed directive on digital operational resilience (DORA directive).
19 March 2021: BIS Monetary and Economic Department published its paper on multi-CBDC arrangements and the future of cross-border payments.
18 March 2021: Australian Senate agreed on several amendments to the resolution of appointment of the Select Committee on Financial Technology and Regulatory Technology. The committee will now present its final report on or before 30 October 2021.
17 March 2021: EU Parliament Economic and Monetary Affairs (ECON) Committee published its draft report on the EU Commission's proposed regulation on digital operation resilience for the financial sector.
16 March 2021: BIS Financial Stability Institute published its paper on Big techs in finance: regulatory approaches and policy options.
10 March 2021: Bank of England (BoE) published the latest meeting minutes from the Artificial Intelligence Public-Private Forum, a joint initiative of the BoE and FCA.
9 March 2021: EU Parliament Economic and Monetary Affairs (ECON) Committee published its draft report on the proposal for a regulation of the European Parliament and of the Council on a pilot regime for market infrastructures based on distributed ledger technology.
9 March 2021: H.R.1602 Eliminate Barriers to Innovation Act of 2021 was introduced to Congress. The bill would direct the SEC and CFTC to jointly establish a working group to analyse the legal and regulatory framework for digital assets and produce recommendations, among other items.
8 March 2021: Bank of Thailand published its results of the Central Bank Digital Currency (CBDC) for business prototype development project.
4 March 2021: BIS published its working paper on big data and machine learning in central banking. The survey contains responses from 52 central banks from all regions of the world and examines how they define and use big data, as well as which opportunities and challenges they see. See also: IFC report (February 2021) on the use of big data sources and applications at central banks.
3 March 2021: US SEC published its 2021 Examination Priorities, focusing on trading practices and compliance of FinTech and digital asset offerings, among other priorities.
2 March 2021: ESMA submitted its response to the EC’s targeted consultation on the establishment of a European single access point (ESAP) for financial and non-financial information publicly disclosed by companies.
1 March 2021: IOSCO published its work programme 2021-2022, including continued contributions to discussions on global regulatory agenda for stablecoins and its final report on AI and ML by market intermediaries and asset managers.
1 March 2021: FCA submitted its response to the UK Treasury Committee’s consultation on the future of financial services.
1 March 2021: Chairman of the US Senate Committee on Banking, Housing and Urban Affairs published their letter to the Board of Governors of the Federal Reserve, calling on the Fed to continue its work researching the possible implementation of a CBDC.
26 February 2021: European Economic and Social Committee (EESC) released its opinion, endorsing the digital financial package proposed by the European Commission.
26 February 2021: UK’s HMT published the independent report on the UK Fintech sector by Ron Kalifa OBE, including recommendations to deliver a digital finance package to create a new regulatory framework for emerging technologies, and the implementation of a FinTech ‘scalebox’ to support scaling innovating technologies, among others.
25 February 2021: EU Parliament Economic and Monetary Affairs (ECON) Committee published its draft report on the proposal for a regulation of the European Parliament and of the Council on markets in crypto-assets and amending Directive.
24 February 2021: US Federal Reserve published its article on the preconditions for a general-purpose central bank digital currency.
24 February 2021: The Securities and Exchange Board of India Chairman announced in his speech a working group has been formed to prepare a roadmap for building a debenture DLT framework, to assist debenture trustees in monitoring security covenants and assessing the adequacy of asset cover.
23 February 2021: The financial sector regulators in the Philippines, including BSP, SEC, Insurance Commission, and Philippine Deposit Insurance Corporation, signed an MOA on the establishment of a Cooperative Oversight Framework on FinTech innovation.
Summary of ICMA FinTech Resources
Primary markets technology directory
Electronic Trading Platform (ETP) directory
Repo Trading Technology Directory
FinTech directory for repo and cash bonds
Distributed Ledger Technology (DLT) Regulatory Directory
New FinTech applications in bond markets
FinTech regulatory roadmap
FinTech and sustainable finance library
ICMA Media Library