The industry is faced with a constant need to evolve and develop. At the Securities Finance Technology Symposium a panel discussion on technology aimed at solving regulatory burdens looked at the current market landscape, new rules frameworks and how the world of post trade will look in the future.
Three regulatory experts discussed what they thought the future held for regulations in the securities finance space, particularly around data, and what the ‘next big thing’ will be.
Despite all the hype, securities finance is still sleeping on the true power of blockchain, according to the first panellist. There are use cases and certain clients are definitely moving towards it, particularly for internal lending programmes, they said, but there is still hesitancy to adopt such a radical technology.
“I know a few of the central counterparties are looking at blockchain as a mechanism for communicating and transacting as well so I think that's a big technology change,” the first panellist said. Leveraging investments, monetising data, reducing costs, doing things more efficiently, and allowing operations to be more automated, “I think it's the natural next stage,” the expert concluded.
The second market expert said that it's not so much new technology that will shape the future regulatory landscape, but “the next big thing for securities markets will be shortening settlement cycles, and obviously we've seen recent issues in the US with retail investors”.
When it comes to retail investing, the panellist questioned whether the mainstream market should be stepping in to help new, smaller entrants reduce risk, such as through developing sponsored models to help connect counterparties, they added.
The third panellist thinks the future will bring technology that improves efficiency because of the high capital costs of running a business. Efficiencies could be found through removing intraday liquidity charges through a blockchain for finality of settlement, they added. “I think what you are starting to see, and you're seeing it with one or two providers, is a lot more focus on that and how do we move securities or tokens around the system in a much more efficient way.”
Particularly on the capital side, in central clearing, anything that reduces the cost of capital for borrowers is a positive step and “we will continue to see moves in that direction,” the expert concluded.
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