Midnight in the Rue Jules Verne
Martin Wheatley's rambling, if interesting speech the other day provided much food for thought. The UK Financial Conduct Authority (FCA) chief executive was speaking at a PR-organized conference in London last week, delivering a keynote that veered ─ wildly at times ─ between retail concerns and high technology issues in wholesale capital markets. High-frequency trading (HFT) was covered alongside mobile payments, cybersecurity with technology incubators in Level 39 and Silicon Roundabout, that cringe-inducing British answer to the Bay Area's tech wellspring.
Indeed, the golden points here were actually in the first half and summary. Wheatley highlighted the difficult role of the regulator when it comes to technology ─ that is, enabling innovation and not standing in the path of advancement, while also trying to resist what he referred to as a "dystopian" future where the growth of tech created a Wild West in which algorithms, AIs and Hugo Weaving run amok. The FCA has come down with a strong case of the Chiba City Blues, apparently.
The second key part of Wheatley's speech, and perhaps a critical way of seeing inside the regulator's grapefruit, is the way in which he framed the future of financial services. It would, he said, be shaped in the future by the engineers and comp-sci students of today, those who have their elbows in the guts of the machinery, and not necessarily the ones who are knee-deep in M&A books at three in the morning on a Saturday. The comments about HFT are relatively throwaway (tighter spreads!), as are those on cyber security, short of saying that everyone should be doing it, and that the FCA has a pretty decent tech base for monitoring markets now.
Regulatory Clouds
Continuing this dystopian theme, the sky above Mansion House was appropriately the color of television, tuned to a dead channel, as George Osborne MP, the UK chancellor, arrived for his annual speech to the City. As expected, he announced a foreign-exchange (FX) market review, although this would be supported by a panel of experts from industry, along with an expansion of criminal penalties for rate fixing. I'm not a lawyer, so I can't say why this wasn't already covered under fraud, but that's just me.
To be honest, while some can argue that mechanisms and processes are favorable to regulation, the fact that the FX market has been largely unregulated is anomalous in the modern landscape, particularly given its size and importance. With the move to electronic trading comes a technology-based way to effect oversight, and even if it weren't for the various scandals that have plagued it over the past few years, this was likely coming anyway.
As a final note, I'll be in Singapore next week for our Asia-Pacific Trading Architecture Summit, and the Buy-Side Technology Asian Summit, where I'll be moderating various panels and chairing both events. If you'll be at the events, see you there, or if you'd like to meet up and discuss issues facing financial firms in the region, send me an e-mail at james.rundle@incisivemedia.com.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Firms worry that lack of ‘explainability’ will be regulatory roadblock for AI
Industry experts share their concerns about advanced AI’s ‘black-box’ nature and how that may attract fragmented regulatory scrutiny.
Caveat creator: GenAI giants’ pledges won’t pre-empt copyright suits
Tech vendors offer indemnities on generative output, but end-users need to check the fine print, warn IP lawyers
Bank-led consortium takes aim at position reporting
Five banks, including Barclays, BNP Paribas, Goldman Sachs and HSBC, have joined forces to mitigate interpretation and implementation errors in position reporting disclosures.
Verafin launches genAI copilot for fincrime investigators
Features include document summarization and improved research tools.
Waters Wrap: Open source and storm clouds on the horizon
Regulators and politicians in America and Europe are increasingly concerned about AI—and, by extension, open-source development. Anthony says there are real reasons for concern.
DSB says industry is ready to meet UPI mandate ahead of deadline
The Unique Product Identifier will be required for certain OTC derivatives in the EU at the end of April, following US adoption in January.
‘Very careful thought’: T+1 will introduce costs, complexities for ETF traders
When the US moves to T+1 at the end of May 2024, firms trading ETFs will need to automate their workflows as much as possible to avoid "settlement misalignment" and additional costs.
Court case probes open-source licenses as movement stands at crossroads
The Software Freedom Conservancy’s lawsuit against TV-maker Vizio begins trial in California, raising questions about open-source licenses and the risks posed by adhering to them.
Most read
- IMD & IRD Awards 2024: All the winners
- Waters Wavelength Podcast: Bloomberg’s Tony McManus
- Most innovative market data project—Tradeweb