The World Federation of Exchanges (“WFE”), which represents more than 200 market infrastructure providers including exchanges and CCPs, on 17 July 2017 responded to the UK Financial Conduct Authority’s (“FCA”) Discussion Paper on Distributed Ledger Technologies (DLT).
The response summarised the WFE’s position on the issue of DLT:
The WFE is encouraged by regulators such as the FCA evaluating both the benefits and the risks DLT can bring. Regulatory authorities must remain focused on ensuring investor protection and the safety of markets whilst enabling innovation in financial technology.
While acknowledging much industry and regulatory focus to date has been on DLT and its potential application to financial markets, the WFE’s view is that other technological areas will develop that are at least as important – if not more so – to the exchange and post-trade infrastructure space, such as cloud computing, artificial intelligence (AI), big data and robotics.
The WFE believes there should be a globally coherent approach to DLT, to ensure a common approach that encourages innovation, maintains the resilience of the system, and safeguards a level playing field.
Nandini Sukumar, CEO, WFE said: “Regulators can enable innovation while ensuring investor protection and the safety of markets. We also believe that the technology focus is widening beyond DLT and FinTech to areas such as cloud computing, AI, big data and robotics. The UK is amongst the global leaders in FinTech and the FCA itself has a track record of nurturing an innovation-friendly supervisory environment. As the global industry body for exchanges and post-trade infrastructure, the WFE therefore welcomes the opportunity to feed into the FCA’s thinking on DLT.
Gavin Hill, Head of Regulatory Affairs, WFE added: “As these technologies develop, it will be important to ensure regulated firms continue to take responsibility for core market functions, and that regulatory authorities closely monitor incumbents and new entrants alike.”
The WFE’s DLT mandate has included responses to multiple regulators over the past year. For more information please see: 1) the 2016 IOSCO/WFE research, 2) the 2016 ESMA Consultative Document; and 3) the recent response to the European Commission consultation on FinTech.
Click here to view the WFE’s response to the FCA in full.