On 8 February 2017, IOSCO published a report on the evolution of financial technologies and its intersection with securities markets regulation.
Many definitions of FinTech have been provided in the last year or so. IOSCO distinguishes two areas within the FinTech phenomenon:
- “Innovative Fintech business models” that typically offer one or more specific financial products or services in an automated fashion through the use of the internet. By doing so, they unbundle the different financial services traditionally offered by service providers — incumbent banks, brokers or investment managers. For example, equity crowdfunding platforms intermediate share placements; peer-to-peer lending platforms intermediate or sell loans; robo-advisers provide automated investment advice; and social trading platforms offer brokerage and investing services.
- “Emerging technologies“ such as cognitive computing, machine learning, artificial intelligence, and distributed ledger technologies (DLT) can be used to supplement both Fintech new entrants and traditional incumbents, and carry the potential to materially change the financial services industry.”
The report focusses on the delivery of securities and capital markets products and services through the use of Fintech. In particular, the report examines: Financing Platforms (including Peer-to-Peer lending and equity crowdfunding), Retail Trading and Investment Platforms (including robo-advisers and social trading and investing platforms), Institutional Trading Platforms (with a specific focus on innovation in bond trading platforms), and Distributed Ledger Technologies (including application of the blockchain technology and shared ledgers to the securities markets).
IOSCO acknowledges the importance also of other categories of FinTech, such as use of big data analytics and artificial intelligence, regulatory technologies (also referred to as RegTech), cyber security and cloud-based technologies, although it deal with them under separate projects. Additional reports are therefore expected.
