RegTech Intelligence

Newsflash: RegCast 7 – Democratized MiFID III?

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We are pleased to release our 7th RegCast today.

Cries for faster, better, and cheaper access to financial services by millions of investors have shaken the markets this year. With advice out of reach for most individuals racing into the markets, they are placing risky bets which are poorly understood.

In this episode, Jackson Mueller, Seccurrency,  Sam Tyfield, Shoosmiths and Richard Bain, State Street lock horns over how well the current FS infrastructure works for retail, what digitalisation is required most what will it mean for the firms, regulators and vendors.

We conclude that retail demand will lead to the rise of trusted technology platforms that renew the legacy post-trade infrastructure. FinTech and regulators have a role to play, but this is one case where market forces may just be strong enough to sort out the technology without a regulatory mandate.

The primary driver for this is that individual investors are entering the markets in record numbers and taking advantage of more complex financial services over their smartphones.

By some estimates, retail volumes are up by an order of magnitude in the past 3 years with Schwab opening a million new brokerage accounts in January 2021 alone. Not only are they coming in numbers, but with high-risk tolerances – Deutsche Bank  reported here found 26% of those with less than a year’s investing experience engage in leveraged trades.

With advice available only to the wealthy, many have turned to chat rooms for trusted strategies, executed on neo brokerage platforms.

Last quarter, price surges in GameStop, Silver, AMC and other shares woke regulators up to potential market issues which require both a review of current regulation and maybe introducing more rules.

Cries for a review of current market conduct and fairness has resulted in heated discussion about payment for order flow (PFOF), the level of client communications, recommendations, disclosures, conflicts, and social media monitoring. A slew of hearings on the regulatory framework has taken place and the industry is talking about moving to T+1 settlement, while wrestling with FinTech, CBDC and Crypto.

Companies like Securrency which raised $30m this week to streamline financial transactions, connect markets and automate compliance can help with the blockchain. However, FinTech and traditional banking infrastructure need to adapt in order to service the customer demand from soup to nuts.

Key topics 

  • RegCast 3: Digital roars and new regulatory frameworks
  • RegCast 2: 2021 Retail Madness, Digitized Markets and Future Regulatory Responses
  • TSS 24: Digital accountability in a democratized finance sector

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