According to details of a recent financial innovation event held in Paris on 16th December by the European Securities and Markets Authority (ESMA) the topic of Blockchain and distributed ledger technology was discussed at great length.
“We followed this with a discussion on the Distributed Ledger Technology (DLT). The DLT certainly is THE innovation of the moment. It is amazing how much interest the technology has attracted from banks, brokers and infrastructure providers in just a few months. The Bank of England recently called it the ‘first attempt at an Internet of finance’. We at ESMA launched a call for evidence to collect feedback from the market on its development a few months back. Beyond the hype, our panel looked into the technology to understand what it is all about and how it could be applied to financial markets. Based on our discussion, we believe that the technology may well help with streamlining post-trading services, reducing costs and increasing security and transparency in the financial system. Yet, for this to happen, a number of challenges, including around privacy and governance issues, will need to be addressed. The transition to the new system may also prove complex and resourceintensive. We as regulators should prepare for those changes to come,” said Verena Ross, Executive Director of ESMA, in her closing remarks.
The day brought together a distinguished cast, with Jean-Paul Servais, President of the Belgium FSMA and Chair of ESMA’s Financial Innovation Standing Committee, opening the event and Adrian Blundell-Wignall, Special Advisor at the OECD, giving the keynote speech. The conference was attended by regulators from the European Economic Area (EEA) with the aim of fostering greater understanding of new trends, products and protocols and around 20 experts drawn from both the industry and regulatory authorities were invited to participate in four panels discussing:
– Corporate bonds and whether innovation can reduce the liquidity gap in these markets;
– Distributed Ledger Technology (also known as the Blockchain); and
– Leveraged Loan funds.
ESMA monitors financial innovation to ensure that supervisors, policy makers and market participants are aware of innovations that may undermine investor protection, give rise to financial instability or threaten market integrity while at the same time appreciating that financial innovation can also beneficially contribute to the economy. Its Financial Innovation Days are a primary source of knowledge for this activity.
The agency first issued a call for information on the technology in April 2015.