Disruptive technology is a ‘chicken and egg’ situation

Future technological developments are not in-line with current regulatory requirements according to a panel of industry experts.
By Paul Walsh
The development of disruptive technologies is not in alignment with current regulations, a panel of industry experts has said.

Speaking at the ISLA post-trade conference, panellists discussed the current state of FinTech applications including the cloud and blockchain technology., suggesting that current regulations do not factor in future technological developments.

“I think we are in a chicken and egg situation with industry technology as we are all having to respond to regulations written by regulators now and not factoring in what future technologies can offer,” said one panellist.

“The industry needs to focus on how we can break this cycle as this affects where we are in utilising our resources and addressing our focus.

“I just don’t think they are well enough understood for people to pursue them when they are having to focus their efforts on addressing regulations so it is almost catch 22.”

The same panellist went on to suggest that such discussions on technology should take place in an open environment as the developments are of mutual benefit to other industry participants.

“We are seeing the creation of FinTech groups. What would be beneficial is to do something similar in the ISLA arenas as we need to better educate ourselves around some of the benefits of the technology we are talking about,” they added.

“We are only as good as we are as an industry with these types of technologies and because of that there is no competitive disadvantage to us discussing them openly.”

Technology discussions within the industry have been prominent as market participants attempt to implement the disruptive technologies.

Another panellist also discussed the legal and cultural obstacles that may affect a wide scale rollout of technology and cited blockchain as a specific example.

“There is talk of a very general solution called blockchain and the impact that this could have,” they added.

“These are very general announcements and you have to look at certain state regulations, for example Delaware announcing that they want to create blockchain securities which only applies to this particular area.

“This shows that there are small scale experiments but at the moment a complete blockchain overhaul has too many legal and cultural hurdles,” said the panellist.