The Hayley Mail: Focusing on FinTech

It has been a busy week for FinTech, in particular those focusing on the evolving use of blockchain in financial services, with big partnerships and warnings from regulators sweeping The Trade’s news desk.

Most recently, the Australian Stock Exchange (ASX) announced it would be increasing its stake in blockchain specialist, Digital Asset.

ASX paid $14.9 million in January this year to acquire a 5% equity interest in Digital Asset and is now to invest a further $7 million, taking its stake from 5% to 8.5%.

The Australian trading venue’s confidence in the future success of distributed ledger technology however, is not shared by all…

US regulators have warned that blockchain could pose “risks and uncertainties” to the financial stability of capital markets in a recent report.

It warned that market participants “have limited experience working with distributed ledger systems” and notes that “vulnerabilities” resulting from the new technology may not become known until it is too late.

Clearly there are still some question marks surrounding the use of blockchain….

The Trade also spoke with Adam Kostyal, head of European listings at Nasdaq, who acknowledged that it can be difficult for regulators to set rules and police markets that are not yet fully formed, but stressed that regulators need to evolve their approach.

He said: “You have to make sure you know the mistakes being made. You have to make sure that the credibility and sustainability of institutions are being upheld.”

Market participants have been weighing in on a recent debate that regulation is “stifling” the development of innovative financial technologies.

The Trade’s editor-in-chief, Joe McGrath, has been in Madrid this week reporting on MoneyConf, a dedicated annual FinTech conference.

Louis Beryl, founder and chief executive officer of Earnest told McGrath at MoneyConf, that regulatory hurdles are still far greater for FinTech innovators.

He said: “In terms of regulatory arbitrage and, if you think about barriers to entry, regulation can be a very significant barrier to entry.

“It is one of the reasons that financial services and healthcare are some of the last to experience this fundamental disruption.”

Regulation is however, driving partnerships in the financial industry as firms team up to deal with increasing costs and regulatory pressures.

A group of European regional banks signed up to be a part of ‘Project Sentinel’, an initiative aimed at helping with the implementation of MiFID II rules on OTC trading.

Those signed up to Project Sentinel are set to benefit from a standardised, MiFID II compliant data model for the front office.

Banks will ‘pool their resources’ for analysis, interpretation and technology investments to reduce the costs of implementation for those involved.

Technology has dominated the financial world in recent years, and this shows no signs of letting up.

It has been predicted by some that the introduction of blockchain technology is set to ‘revolutionise’ the sector, but as recent headlines have highlighted, not everyone is confident about its uses and the risk involved.

Stay tuned to The Trade News for the latest news in FinTech.