23 June 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
In the latest meetings, ICMA’s CDM Steering Committee together with REGnosys focused on modelling the repurchase leg settlement in the CDM for repo and bonds. Based on anonymised sample test transactions shared by SteerCo members, REGnosys furthermore undertook a mapping of FIX messages to CDM to demonstrate how a repo transaction is represented in the CDM, providing a single, consistent view. Definitions in the CDM for repo and bonds are aligned with the GMRA and the ERCC Guide to Best Practice in the European Repo Market.
Save the date: Looking ahead, ICMA will be holding a virtual event on 21 July 2021 to showcase the implementation of the CDM for repo and bonds and its benefits. Further information will be communicated in due course.
ICMA’s CDM webpage contains links to presentations and podcasts related to the CDM, amongst other resources. ICMA member firms who would like to contribute to this initiative are encouraged to get in touch.
ICMA FinTech resources
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 processing across the entire lifecycle of bonds, from issuance and trading to settlement, and also to 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:
- 14 June 2021: Broadridge launched its DLT Repo Platform to execute bilateral repo trades using smart contracts.
ICMA has recently updated the Primary markets technology directory (now 41 solutions), and FinTech mapping directory for repo and cash bond operations (now 189 solutions) following the inclusion of additional solutions. 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:
- 3 June 2021: European Commission announced its proposal on a framework for a European Digital Identity.
Any feedback or flagging of items to include are very welcome. Please contact us.
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. Recent updates are listed below.
- 7 June 2021: China’s Ministry of Industry and Information Technology published its guiding opinions on accelerating the promotion of blockchain technology applications, including promoting establishment of blockchain standards (item 2.3.1), developing a blockchain pilot zone under a regulatory sandbox regime (item 2.4.3), and supporting eligible blockchain companies with preferential tax policies, among others items.
Members are encouraged to flag relevant consultations and express interest in contributing to potential consultation responses.
Until 10 September 2021: Basel Committee on Banking Supervision has launched its consultation on preliminary proposals for the prudential treatment of banks' cryptoasset exposures.
Until 1 August 2021: ESMA has published its call for evidence on digital finance, following the EU Commission’s digital finance package and the request to the European Supervisory Authorities to provide technical advice on necessary adaptations to the existing legislative framework with a view to embrace digital finance in the EU.
Until 30 July 2021: UK’s Law Commission has published its call for evidence on digital assets, seeking information on how digital assets are used, treated and dealt with by market participants and about how the law might accommodate digital assets now and in the future.
Until 23 July 2021: EU Commission’s proposal for a Regulation laying down harmonised rules on artificial intelligence (Artificial Intelligence Act) is open for feedback. Feedback will be shared with the EU Parliament and Council with the aim of feeding into the legislative debate.
Relevant publications and news items
23 June 2021: BIS is pre-releasing today a special chapter on CBDCs from its Annual Economic Report 2021; the full Annual Economic Report and the Annual Report will be released on 29 June.
18 June 2021: HKMA issued a circular requesting selected licensed banks to participate in a “Tech Baseline Assessment”. It seeks to take stock of banks’ current and planned adoption of fintech in the coming years to identify those fintech business areas or specific technology types which may potentially be underdeveloped and would benefit from the HKMA’s support.
17 June 2021: HKMA launched a new Regtech Adoption Practice Guide series to provide banks with detailed practical guidance on the implementation of Regtech solutions. HKMA also published the seventh and final issue of its Regtech Watch series.
16 June 2021: BIS, in partnership with relevant central banks, launched the Innovation Hub Nordic Centre. This follows the recent launch of the Innovation Hub London Centre (11 June 2021). Further Innovation Centres are expected to be launched in Toronto and Frankfurt/Paris.
16 June 2021: UK’s Government Taskforce on Innovation, Growth and Regulatory Reform published its report including recommendations to reform the regulatory framework in order to promote FinTech and innovation, among other areas.
15 June 2021: BaFin published its supervisory principles relating to Big data and artificial intelligence.
14 June 2021: FSB published its overview of responses to the public consultation on outsourcing and third-party risk.
12 June 2021: Thai SEC approved the new rules that prohibit digital asset exchanges from providing services in relation to utility tokens and certain types of cryptocurrencies.
11 June 2021: BIS published its paper on CBDCs beyond borders, exploring initial thinking on the cross-border use of CBDC based on results from a survey of central banks.
11 June 2021: South Africa's Intergovernmental Fintech Working Group (IFWG) published its position paper on cryptoassets.
10 June 2021: BIS Innovation Hub, Swiss National Bank and Bank of France announced their collaboration in a wholesale CBDC (wCBDC) experiment to investigate potential benefits and challenges in settling cross-border payments and digital financial instruments.
10 June 2021: Basel Committee on Banking Supervision launched its consultation on preliminary proposals for the prudential treatment of banks' cryptoasset exposures.
9 June 2021: BOJ published the English translation of a report focusing on standardisation in Information Technology related to digital currencies.
8 June 2021: BIS published its working paper on Central bank digital currency: the quest for minimally invasive technology.
8 June 2021: HKMA unveiled its FinTech 2025 strategy to drive FinTech development of Hong Kong. Further details of specific initiatives are expected to be announced at a later stage.
7 June 2021: BIS published its working paper 'Money, technology and banking: what lessons can China teach the rest of the world?'.
7 June 2021: Bank of England published its Discussion Paper on New Forms of Digital Money and summary of responses to the 2020 Discussion Paper on CBDC.
4 June 2021: ECB published its opinion on the EU Commission’s proposed regulation on digital operational resilience (DORA) and proposed directive.
2 June 2021: ECB published its annual report of the international role of the euro, including a special feature examining the impacts of an issuance of CBDC.
1 June 2021: European Investment Bank (EIB) and European Commission published a new study on the state of play in artificial intelligence and blockchain technologies in the European Union.
31 May 2021: BOJ published a report on Digital Transformation of Japanese Banks.
28 May 2021: Korean FSC announced its plan to enhance supervision on virtual asset transactions and improve transparency.
28 May 2021: European Parliament published its paper on Artificial Intelligence market and capital flows, studying the transformation that AI is bringing to the financial sector and how this sector can contribute to developments of AI applications.
28 May 2021: Sveriges Riksbank announced it will be cooperating with external participants for integration testing between existing systems and the e-krona platform its next pilot phase.
25 May 2021: Securities Commission Malaysia and the United Nations Capital Development Fund launched the FIKRA Islamic Fintech Accelerator Programme (FIKRA), to identify and scale innovative Islamic fintech solutions addressing new Islamic capital market offerings, accessibility and social finance integration.
24 May 2021: Brazil’s central bank published its guidelines for the development of a digital format of the real.
Euronext in the European fixed income space
Chris Topple, Euronext London CEO, talks to ICMA’s Martin Scheck about changes in European fixed income markets post MiFID II and how Euronext has scaled up its fixed income capabilities through recent acquisitions including Borsa Italiana to meet market structure challenges. They discuss the electronification of fixed income markets, the future of fixed income trading and improving post trade efficiency.
Asia international bond markets – a conversation with Christophe Roupie of MarketAxess
Andy Hill, Head of Secondary Markets at ICMA, speaks with Christophe Roupie, Head of EMEA and APAC at MarketAxess, about recent and ongoing developments in the Asia international bond markets. Christophe shares his observations and insights on a number of aspects, including the internationalization of local markets, the growing predominance of China, the rapid adoption of e-trading and automation across the region, as well as the potential for further transformation of market structure in the near future.
Primary Market Financial Technology - Livestreamed
This 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. Covering topics such as digital bookbuilding, digital assets, AI, machine learning and how banks talk to tech to name a few, the course has been developed by Duncan Philips, and features presentations by guest speakers in the primary market fintech space. This is an interactive course with plenty of opportunities to engage with some of the key figures in FinTech, and we highly recommend booking early to avoid missing out!
The next livestreamed course will be delivered over six sessions on November 3, 4, 5, 10, 11 and 12 from 10.00-13.30 CET.
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