The World Federation of Exchanges said it was encouraged by the Commission’s consultation on FinTech as it believed that it was important to get policy right in this area to avoid the rush to regulate.
These comments came following the WFE’s response to the Commission’s consultation document “FinTech: a more competitive and innovative European financial sector”, which was published on 23 March 2017. The consultation formed part of the Commission’s wider objective to ensure that the European economy, industry and consumers take full advantage of the digital market.
Interested parties were invited to develop the Commission’s policy approach towards technological innovation in financial services and help the Commission to understand the impact technological innovation in financial services had made from the perspective of providers of financial services and consumers and whether the regulatory framework aided technological innovation in line with its three core principles:
(i) technological neutrality: ensuring the same activity is subject to the same regulation, therefore creating a level – playing field;
(ii) proportionality: technology enabled financial services that reflect a firm’s business model, size and systemic significance; and
(iii) market integrity: FinTech should promote more market transparency to the benefit of consumers and businesses without creating unwarranted risks.
The WFE’s response noted that:
- innovation should be driven by markets enabled by regulation. Any regulatory approach should encourage innovation while ensuring investor protection and security in the financial system;
- EU authorities should engage with financial institutions, FinTech firms and end users to thoroughly understand financial technologies and their applications before regulating; and
- challenges may arise when unregulated firms lead the development of FinTech solutions related to the core functions of financial markets, which may result in negative consequences for investors and orderly markets.
The consultation window closed on 15 June 2017 and the Commission will publish the summary of responses on its website at a later stage.