24 February 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
Over the last few months, ICMA has established a Steering Committee to manage the development of the CDM for repo and bonds and ensure we have the right level of resources. The initial modelling phase will be launched the first week of March, 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.
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.
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.
This is intended to be a living document. Any feedback or flagging of items to include are very welcome. Please contact us here.
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:
- 4 February 2021: A blockchain-based reporting system for Poland’s treasury saving bonds transactions was launched, in collaboration with CoinFirm, IBM, PKO Bank Polski and the National Clearing House.
- 1 February 2021: Rabobank completed the first real-time commercial paper transactions using blockchain technology, following a successful two-year pilot in partnership with Commerzbank and Euroclear. See also: media reports.
- 29 January 2021: SBI Group and SMBC announced (in Japanese) the establishment of joint venture to operate a digital securities trading system.
- 29 January 2021: SGX and Temasek announced their digital assets joint venture – Marketnode – partnered with fixed income issuance and data firm, Covalent Capital (Covalent) to build Asia Pacific’s first, end-to-end digital infrastructure in the fixed income space.
- 19 January 2021: Banque de France conducted a successful experiment with IZNES on the use of central bank digital money for interbank settlement purposes.
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.
- 1 February 2021: Swiss Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (DLT bill) that enable ledger-based securities entered into force, following Federal Council adoption on 11 December 2020. The remaining provisions of the DLT bill are expected to enter into force on 1 August 2021.
28 January 2021: The future of electronic trading in bond markets with Neptune Networks
Byron Cooper-Fogarty, Interim CEO, Neptune Networks Ltd speaks to ICMA’s Liz Callaghan about the problems Neptune is solving for the bond market, how electronic bond trading is evolving and whether regulation is helping or hindering technology innovation.
Check the ICMA Media Library for more webinars and podcasts
Look out for our next FinTech virtual event at the end of March, featuring expert speakers on Tokenisation and Central Bank Digital Currency.
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.
18 February 2021: ASX released its consultation paper on CHESS Replacement: Proposed changes to netting and settlement workflow. The consultation paper closes 18 March 2021.
7 January 2021: UK HM Treasury published its consultation on the government’s approach to cryptoasset regulation, with a focus on stablecoins; and call for evidence on investment and wholesale uses. The consultation closes 21 March 2021.
23 December 2020: US SEC issued a statement and request for comment regarding the custody of Digital Asset Securities by Special Purpose Broker-Dealers. The statement and request for comment are published on the Commission’s website and will become effective 60 days after publication in the Federal Register.
Relevant publications and news items
23 February 2021: Bank of England published its Data Collection Transformation Plan. The Transformation Plan sets out the issues facing parties involved in the current data collection process; and lays out a vision, reforms and set of next steps that aim to address those issues.
23 February 2021: BIS Innovation Hub and SWIFT announced the launch of a new ISO 20022 and API hackathon. Registrations close 8 March 2021.
23 February 2021: BIS Innovation Hub announced the Digital Currency Institute (DCI) of the People's Bank of China (PBC) and the Central Bank of the United Arab Emirates (CBUAE) have joined the central bank digital currency project m-CBDC Bridge for cross-border foreign currency payments. See also: joint memorandum announced by CBUAE and HKMA.
22 February 2021: ECB published its opinion on the Commission’s proposal for a regulation on Markets in Crypto-assets, and amending Directive (EU) 2019/1937.
18 February 2021: UK’s FCA published an update on its Digital Sandbox Pilot following the conclusion of the initial programme.
17 February 2021: Sweden’s Riksbank published its staff memo on the possibility of a cash-like CBDC.
12 February 2021: Sweden’s Riksbank announced it will extend testing of a technical solution for the e-krona.
11 February 2021: Bank of Canada published reports solicited by the University of Calgary, McGill University, the University of Toronto and York University on potential system designs and business models for a digital currency.
11 February 2021: GLEIF unveiled its issuance and technical infrastructure models for its recently announced verifiable LEI (vLEI) system.
9 February 2021: ESMA, ECB, and EIOPA published a joint response to the EC proposal on proposed Digital Operational Resilience Act (DORA).
9 February 2021: ECB published an interview with Fabio Panetta, Member of the Executive Board of the ECB, conducted by Tim Bartz on a digital euro.
9 February 2021: Korean FSC announced in a consultative body meeting its plans to continue to make regulatory reforms to rules on FinTechs and BigTechs, following the publication of its detailed workplan in January.
8 February 2021: Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF) published a report on its work in financial innovation.
8 February 2021: Bank of Korea published (in Korean) its report on comprising CBDC related legal issues and recommendations for revisions to Korean law.
8 February 2021: SGX, Trumid and Hillhouse Capital announced their joint venture to launch a new Asian electronic bond trading platform.
5 February 2021: FCA published its multi-firm review on implementing technology change.
2 February 2021: India’s SEBI circulated the revised framework for its innovation sandbox, including access to market test data in addition to testing facilities, among other revisions.
2 February 2021: EC requested technical advice from EBA, EIOPA and ESMA for on digital finance and related issues, per its digital finance strategy.
2 February 2021: BIS Financial Stability Institute published its paper on Fintech regulation: how to achieve a level playing field.
2 February 2021: LedgerEdge announced its DLT-based corporate bond trading platform launch in 2021 will be in partnership with Yaala Labs, a cloud-native market infrastructure provider.
1 February 2021: Digiassets Exchange (Singapore) Pte. Ltd. (“SDAX”) announced it received an Approval-in-Principle from MAS to operate a digital asset exchange.
31 January 2021: UAE Centre for the Fourth Industrial Revolution (C4IR UAE) announced its MoU with Dubai International Financial Centre Authority (DIFC) and Dubai Financial Services Authority (DFSA) to allow FinTech companies to develop and test tokenisation of digital assets with blockchain technology.
29 January 2021: Lok Sabha, the lower house of Indian parliament, revealed in its bulletin that it will contemplate a Cryptocurrency and Regulation of Official Digital Currency Bill to create a facilitative framework for the CBDC to be issued by RBI. The Bill also seeks to prohibit all private cryptocurrencies in India, but allows for certain exceptions to promote the underlying technology and its uses.
29 January 2021: The Fintech Committee of the People’s Bank of China convened a meeting to review its work in 2020 and discuss key tasks for 2021.
28 January 2021: Korean Financial Services Commission announced a detailed work plan for financial innovation and digital finance, including the introduction of a digital sandbox for FinTech startups.
27 January 2021: BIS published the results of its third survey on central bank digital currency. The latest responses show that as a whole, central banks are progressing from conceptual research to practical experimentation.
27 January 2021: BIS published its working paper - Permissioned distributed ledgers and the governance of money. The paper examines the economic opportunities and challenges of DLT, focusing on the strategic elements underlying its optimal design and its efficiency compared with a centrally managed payment system.
27 January 2021: German Government published its data strategy, aiming to make Germany a pioneer for the innovative use and sharing of data in Europe.
20 January 2021: APRA provided a submission to the Senate Select Committee on Financial Technology and Regulatory Technology.
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