Today, the European Securities and Markets Authority (ESMA) responded warmly to the consultation paper “Fintech: a more competitive and innovative financial sector”, which was written by the European Commission. ESMA welcomes the motivation to do a stock-take of the European Union’s financial technology industry.
ESMA, the France-based regulator, supports fintech endeavors, as the European authority deems it a step forward in evolution if businesses set themselves the goal of bettering customer service and the customer experience. This is a business model that improves financial inclusivity. ESMA, however, is also aware of the risks involved with fintech, and has addressed them in its response.
ESMA states that technology-driven savings should reach clients, and expects the European Commission to consider the efforts being made within the Joint Committee. Any legislation should pass an in-depth impact assessment.
The regulating authority called for an EU-level crowdfunding regime, which should ensure the protection of the traders within the European Union. In addition, crowdfunding platforms could then work cross-border within a shared regulatory framework.
Regulation technology (regtech) comes with certain benefits, such as analysis and data reports. ESMA adds that companies offering similar services are to be regulated with equal treatment. Fintech startups are specifically believed to benefit from regulation oriented advice when dealing with the relevant legal framework. ESMA also encourages the idea of standardized and harmonized data.
Outsourcing, such as arrangements with the cloud, should be implemented in compliance with European legislative guidelines. These include data security and protection laws. ESMA has been monitoring developments in the market around Distributed Ledger Technology (DLT blockchain) since the release of the results in February 2017.
Finance Magnates recently covered ESMA’s MiFID implementation results, in which it concluded that CySEC had not been meeting regulatory standards.