IBM Watson, Euro Clearing and Finastra: A Week in Review

John reviews some of last week’s top sell-side stories, including the European Commission’s proposals for new rules on the supervision of non-EU CCPs.

John reviews some of last week’s top sell-side stories, including the European Commission’s proposals for new rules on the supervision of non-EU CCPs, IBM scoping out the regtech space, and the creation of Finastra.

Tech Challenges Loom as Europe Eyes London’s Clearinghouses

The fallout from Brexit has begun in earnest for the capital markets as the European Commission (EC) this week unveiled new plans for supervising non-EU CCPs as a direct result of the UK’s departure from the European Union.

In a nutshell, the EC’s proposal suggests splitting non-EU—or third country—central counterparties (CCPs) into two camps: The first would consist of smaller CCPs allowed to use existing equivalence arrangements, while the second would comprise systemically important CCPs. 

There are undoubtedly significant market, operational and technological implications for such a move. James Rundle and Aggelos Andreou have compiled an excellent analysis with some insightful commentary from senior figures from the European Securities and Markets Authority (Esma), Eurex and the London Stock Exchange, which is well worth a read, as is James’ recent column on what Brexit and last week’s UK General Election means for the buy side.

IBM Takes Aim at the Regtech Space Using Cognitive Technology

IBM has set the considerable cross-hairs of its artificial intelligence (AI) and analytics behemoth, Watson, on the RegTech arena, rolling out three new products to aid banks with the evolving regulatory landscape, anti-money laundering and know-your-customer requirements, and to help improve their architectural performance.

US editor, Anthony Malakian, spoke with Alistair Rennie, general manager of IBM Watson Financial Services Solutions, about how the software giant is utilizing Watson in this space, although it is the potential of using cognitive computing with blockchain technology that I found most noteworthy.

Rennie said that the combination of the two could lead to a processing or monitoring platform becoming a compliance system at the same time, something that I’m sure many sell-side organizations would be interested in, given the astronomical figures involved in trader monitoring specifically and regulatory compliance in general.

Waters held its inaugural RegTech Americas event on June 14 in New York, where IBM and Promontory senior executives shared their vision for regtech with respect to end-to-end risk and compliance across the enterprise. Panel write-ups from that event will surface imminently. 

Misys, D+H Complete Merger to Launch Finastra

The year so far has been dominated by a spate of mergers and acquisitions, in particular the long-running and ill-fated attempt to marry the London Stock Exchange and Deutsche Börse, while Euronext, Bloomberg and IHS Markit have all been involved in big-money deals.

The launch of Finastra might not rank as the highest among these, but it is still a significant development for the financial markets technology space.

London-based Misys has made a name for itself through its risk and portfolio management systems for fund managers, and although there doesn’t seem to be any immediate crossover with D+H’s stable of payments and lending technologies, I’m sure those at the helm of the new entity will have already drawn up integration plans.

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