February 28, 2025 • 30 mins
In this special show recorded live in Madrid, our regular guest Aušrinė Juškevičiūtė, Institutional Relations Management, REGIS-TR, SIX, interviews Pilar Martínez, Head Public Affairs EU & Latin America, BME, SIX. They discuss the new EU capital markets plan, the Draghi report, DORA and more regulatory and legal harmonisation facing market participants and trade repositories in 2025.
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Speaker 1 (00:08):
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(00:28):
Hello and welcome back to theregistry art roundup podcast.
Yes, we're back with anotherspecial episode that was
recorded live a little whileback at the palacio de la bolsas
in madrid.
Yes, it's just me, andrew KeithWalker, and our producer, manuel
Moreno-Garcia, here in thevirtual studio to introduce two
(00:52):
very special speakers who had afireside chat at our annual
client event focused on theregulatory outlook for the
regtech industry, for thederivatives industry and for
capital markets, and looking atemerging trends and the
challenges facing the CapitalMarkets Union plans for 2025.
(01:16):
Our show is hosted this week byOsrina Yuskeviscuti, and Osrina
is joined by Pilar Martinez,who's the head of public affairs
for Europe and Latin America atBME6.
And together they unpick thethreads beyond EMEA refit in
(01:36):
terms of the broader regulatoryoutlook, the challenges that
were raised for the EU, forcapital markets and debt
management in the EU by theDraghi report and the broader
macro themes that are going tobe shaping 2025.
So, without further ado, let'sgo over to Ozrina Juskiewicz.
Speaker 2 (02:00):
Thank you.
Thank you, manuel, for such anice introduction and hello
everyone.
So I think we have heard a lotalready until now about EMI
Refit, uk Refit.
So just to let you know, we arenot here to talk about EMI
Refit or UK EMI Refit.
So from our side, what we wantto talk with you about is to
(02:20):
have a chat, because there is somuch more ongoing in Europe and
beyond Europe this year andalso next year.
So maybe just to start with thefirst topic to be Capital
Markets Union, right?
So this is the one that you, Iknow, really closely follow.
So there have been reports fromDraguleta earlier this year
(02:44):
about the future of EuropeanUnion and future financial
markets and they're telling that, well, the first and high
priority is to complete CMAU,right, and from your perspective
and from your view, do youthink what's completed is going
to solve all the problems andchallenges we have in the
financial sector?
Speaker 3 (03:05):
Well, thank you very much.
Sure, now we can hear eachother.
Well, good morning everyone,and thanks a lot for bringing
that question.
Definitely, draghi and Lettahave been something that has
been sitting on our desk sinceApril that the first report was
released, and your question wassuper specific.
I wish they were the key tofinalizing CMU, but it certainly
(03:30):
points out to a lot ofchallenges and a lot of issues
that the EU needs to look intoif they want to build that
capital markets union in thenext political cycle.
It touches upon elements suchas consolidation of
infrastructures, supervisoryarrangements, bringing retail
investors onto the table, whichis something that many other
(03:54):
places are already looking into,definitely, and so I do believe
they are a very good exercisetowards pointing to the
challenges that the EU needs tolook into for the next political
cycle.
However, those challenges needto be fixed somehow with
regulation, and that issomething that the Commission
(04:15):
specifically should be lookinginto the implications of
additional regulation.
You know very well our sectoris over regulated sometimes.
Jesus already mentioned that intheir in his opening speech.
So, um, that is something forpolicymakers to keep an eye on.
Simplify in existingregulations.
(04:35):
Let's also touch on draggy,anyways, but um, to me, what's
more important is that the euanalyzes the internal
differences, the comparativedisadvantages that are created
because many of the regulationsare not streamlined and are not
applied in a harmonized manner.
So perhaps that is somethingthat they could look into and
(04:57):
definitely considering therelation with third countries,
not just with the UK, whichmight be very close to us, but
also with the US and withSwitzerland.
That's a bit I wish I had thekey answer to it.
Speaker 2 (05:14):
I think that was very , very nice, olivia, so thank
you very much for that.
And well, digging a bit moreinto the European Union.
Well, we had elections rightthis year around the globe, but
also in the European Union.
And we had elections right thisyear around the globe, but also
in the European Union.
And we have a new commissionand, of course, as a next step,
we are awaiting their work planfor 2025.
(05:35):
Any ideas what we could expectthere?
Speaker 3 (05:39):
Well, only last week we had the hearings held at the
parliament and we have the fullcommission already pointed out.
So I think that's a very goodfirst step to begin with.
But, like I said, and I knowI'm repeating myself, but the
whole element around regulatoryburden, around administrative
burden for entities to complywith regulation, that is
(06:01):
something that the EU, and theCommission particularly, must
really look into.
What I do believe and it's alsotouched in Leta's report is
that the industry should have abigger role.
Having consultations with theindustry, having roundtables,
having some sort ofprivate-public collaboration
with the entities, can help theCommission understand better the
(06:23):
implications of theirregulation, what is needed, what
is not needed that much, whatneeds to be done in a different
way, and so creating thisinvolvement with the industry,
with it'll it'll be somethingthat we will very much um want
to see from from this newcommission.
But, um, we've spoken a lotabout regulation before and now,
(06:44):
and, although the commissionhas been on a break for a while,
they left a little bit ofhomework and they left Dora on
the table, so I was very muchhoping you could explain a
little bit on the topic.
Speaker 2 (07:00):
Yeah, definitely.
Well, dora, it's a big topicalready ongoing for two years
that I've been looking veryclosely.
So thanks for these questions.
Indeed, dora DigitalOperational Resilience Act is
going to come into place alreadynext year, so in less than two
months they're going to be DORAapplicable.
Well, the idea of this wholeregulation from the European
(07:33):
Europe is to enhance the ITsecurity and also to make
financial markets and financialentities more resilient.
Why we have this Zora and whywas the need actually of it.
And also, we're in the digitalage right that there are more
and more financial entities thatare kind of reliant on their
services to the ICT third-partyservice providers.
And when I say dependent orreliant, we are talking about
(07:55):
that 80% of the financialentities actually they're using
the ICT third-party serviceproviders for their critical
services.
So being so dependent serviceproviders for their critical
services, so being so dependent,this also increases
vulnerability to the cyberincidents, also to the
operational problems, and Ithink that could, if not managed
(08:16):
actually correctly, could alsocause to the other sectors and
also influence the biggereconomy.
And this is what we have beenlooking already, you know, from
the European Commission side andthey have seen that well
(08:37):
talking in the last five years.
There's like around 40% of ICTrelated incidents that a
financial sector has experiencedand basically 70% of all the
financial entities have at leastone significant incident last
year.
So most of ICT third-partyservice until now providers.
They were not regulated, or notat least in the same framework
like most of our financialentities are.
(09:00):
So, due to these reasons, therewas DORA created two years ago.
Well, two years ago it cameinto force and Palladia is in
the purposes, of course, toensure and to increase the IT
security in the financial sectorto make sure that financial
entities can withstand and alsorecover from the cyber incidents
(09:26):
.
There is also harmonization ofthe regulations that you also
mentioned before with the oldidea to harmonize the
requirements across the Europeand the member states and also
basically to centralize also therole of the supervisory
authorities.
So this would be the purposeand actually it's an
(09:47):
unprecedented regulation infinancial sector in terms of how
big it is Like really itaffects all financial entities.
So we're talking that all typesof financial entities are under
the scope of DORA, so banks, ofcourse, trade repos nor is that
registered we also are thereand also ICT third-party service
(10:08):
providers that are going to beassigned as critical.
So we're talking about morethan 22,000 firms in Europe that
are going to be affected bythis regulation.
So, yeah, it's really big andit's coming in less than two
months.
Speaker 3 (10:21):
Okay, that sounds challenging.
Definitely those numbers arehuge.
Is there any framework, anystructure beneath it?
Because I'm assuming for such abig file there must be a very
solid infrastructure behind.
Speaker 2 (10:36):
Yeah thanks God there is.
So there we have the five mainpillars, five key areas that you
can reach through the level onelegislation and also the
technical standards you canreach, you know, through the
level one legislation and alsothe technical standards.
You can go into more in details.
So just quickly to overlook.
So we have ICT risk management,of course.
So it's like lots of principlesand requirements on ICT risk
(10:58):
management framework, includingalso the governments and what
management board needs to do andwhat business continue plans
need to to entail what would beinternal controls.
Then we have also ICT riskmanagement framework.
So the idea is to harmonize howthe incidents are going to be
reported on the DORA.
(11:19):
So not all the financialentities so far are reporting
incidents.
So it's going to be harmonized.
We're going to have thetemplates format for everyone is
going to be the same and alsothe criteria, how we have to
report.
Then, of course, it's about theoperational resilience testing.
So this is also other pillar.
So they establishes, basicallyDORA establishes, like the basic
(11:42):
testing that all financialentities will have to do, and
then also it's going to beadvanced testing for some
entities that will be of hugesignificance, let's say so the
authorities will need to come tothem and will need to inform
that they will need to dospecific TLPT testing.
Then we're looking at managingof ICT third-party risk.
(12:04):
And when I'm talking aboutmanaging, so what DORA
establishes, so all thefinancial well, basically
responsibility it pulls underfinancial entity to make sure
you know that you manage thecontracts correctly of your ICT
third-party service providers,that you have all the provisions
in place, that you relate andmonitor the risk.
And this is also what is likereally big pillar that we are
(12:29):
working.
We're going to have a registerof information where we have to
put all the contracts in thereand based on that, the
supervisory authorities and ESASwill designate the critical
service providers and they wantto say which are the critical
service providers in Europe andwe're going to see the list of
it.
But we're talking about bigplayers.
I guess it's going to be Amazon, google, microsoft, the ones
(12:51):
that they really want to kind ofcontrol a bit.
And then we have informationsharing, which is voluntary, so
to have information sharedbetween the financial entities
on cyber threats and issuesbetween the financial entities
on cyber threats and issues.
So five main pillars, lots ofalso technical standards for
(13:11):
each of the pillars, sevenalready approved one.
We are still waiting becausethere was a dispute between the
commission and ESA regarding theuse of LEI.
But yeah, we are working on itProject established on our side.
We are blood circles with esmaon the workshops and it's really
, it's really big and it's notjust actually an european union
(13:33):
that's looking well.
We have torah, but inswitzerland we also have
operational resonance framework.
We also have in the unitedkingdom stand differently, but
this is the topic that isongoing and definitely next year
is going to one of the biggest,biggest topic after f it
definitely sounds like a lot ofwork.
Speaker 3 (13:52):
so, um, I'm sending you all um our best energy to
cope with it, but I think that'snot the only piece that was
left from the last commission.
And, um, I wanted to ask youabout SFTR.
Is it SFTR 2.0, right, sftr 2.0.
Sftr 2.0.
That's also an effort.
Sftr?
(14:12):
Yeah, exactly, but that hasbeen laying around a lot as well
, and I've heard some rumors,but perhaps you have a bit more
insight onto it.
Speaker 2 (14:21):
Yeah, so, yeah, you're right.
So I guess there are morerumors so far, but it was
mentioned actually in one of thecommission's report it's called
macro prudential framework fornon-banking financial
intermediaries that they'reexpecting the benefit of a CFTR.
So CFTR 2.0 in 2025 actually,and even to have the
(14:44):
consultation paper this year.
However, so far it's justrumors.
We haven't seen anything there.
Also, with the regulators thatwe have talked, we're still not
sure if that is coming At somepoint.
Of course it's going to come,because FTR came to force in
2016, and we started reportingin 2020, and we already have a
(15:06):
mirror fit.
So this is coming, but we don'tknow yet when.
But we can also make someassumptions actually what we
could expect from this FTR 2.0.
So, first of all, it's going tobe probably expanded scope, so
we're going to have alsonon-banking intermediaries that
will have to report sfts.
(15:26):
Look at what happened with amireffort.
We could also expect there'sgoing to be new fields added,
although sftr already has a lotlike.
Yeah, I know it's just likeadding any more fields to be
reported, but yeah, there shouldbe additional reporting fields.
I wrote it to enhance dataquality and ensure accurate
monitoring.
Well, that could be like fieldssuch as effective dates,
(15:49):
intra-group identifier,executing agent field and etc.
And of course, I would imaginethe FTR 2.0 would take into
account also operationalresilience and cybersecurity
factors, because it also wouldbe aligned with TORA.
What else security factors,because it's it's also would be
aligned with with torah and whatelse.
Well, esg is very big right nowand also affecting more and
(16:10):
more financial regulations, soit should be also foreseen
somehow to be reflected in sftr,ref it and giving them actually
also the scandals we have ineuro with the taxes.
So there is a rumor that it'salso be somehow related with the
tax compliance.
So I think that's what we couldexpect.
Again, still, the calculationswe don't know.
(16:32):
Even if it comes, you know therevision soon.
I don't expect in two, threeyears that we're going to have
it.
But you work with thecommission more you know, work
those corridors.
Speaker 3 (16:42):
So whenever you hear something, so just shout to us
so that we could be preferredand you know we'll be the first
to know about it.
Well, you can be sure, if Ihear anything, I'll let you know
right away, because that soundsalso like a lot of work.
Yeah, that's, that's gonna bebig and okay.
Speaker 2 (16:57):
So actually well before, you mentioned also about
the cooperation of thirdcountries and how to support
that.
You mentioned UK, you mentionedSwitzerland, united States.
So in your opinion, if there isno alignment with that third
country, so there is nocooperation, how it could be an
obstacle for EU and also foreconomic growth?
Speaker 3 (17:18):
Well, I think for the past two CMU action plans, the
Commission and the EU as a wholehas become aware of the need of
being integrated with the restof the world.
It's not just the EU on theirown anymore, but we need to
interact with other players andwe have a number of stakeholders
that we need to live up to,namely our clients, our issuers
and our investors.
(17:39):
So it is clear that the EUcannot afford any longer to move
in isolation and in this sense,for example, last week we read
about the report from ESMA aboutthe long awaited shift to 2
plus 1, the shortening of thesettlement cycle, and they
already came into agreement witha date it's going to be end of
(18:01):
2027, which pairs very well withthe UK, who had announced
already in the task force theiraim to shift also by end of 2027
, and also with Switzerland.
So I think this is a greatfirst step into addressing the
relation with third countriesand into placing the EU as a
(18:22):
real key stakeholder in theinternational environment.
But perhaps not just on T plusone, but on the rest of topics
and on the rest of regulationsthat we have, there's two
elements that I think need to betaken into account by our
policymakers.
And number one is that the EU isnot the US.
I know the policymakers look tothe US, which is fair and in
(18:46):
many cases, is the way to lookat them towards.
But because of the nature ofthe union and because of the
aims that it has, it's no longerjust capital markets, unions,
capital investments and savings,for example.
We cannot replicate everysingle thing that comes into the
US, that comes from the US.
We need to make it our own andit needs to stem from the very
(19:08):
own nature of the EU.
So that's perhaps somethingthat I would very much like to
see in our strategy with thecountries from now on.
And the second element and Iknow I touched briefly upon this
before, but I do think it willmake a difference is addressing
the comparative disadvantagesthat we have in the union
because of the differentapplication of regimes and I'm
(19:32):
talking mainly taxation, I'mtalking solvency and I'm talking
company law, for example whichthey remain within the
sovereignty of the differentmember states.
But applications that divergevery much from member to member
can create these pockets ofcomparative disadvantages which,
in the end, when you look atthe union from the outside, it
makes it less competitive as abloc.
(19:54):
So I do think that is somethingthat needs to be looked into
when we think about competitionwith countries and into creating
something that is aninvestor-friendly environment
for the next cycle.
Let's put it that way.
But if we talk about thirdcountries and about refits again
(20:15):
, I know that it seems to belike your favorite topic lately
I wanted to ask you aboutFinFrag Review, because that's
also something on the thirdcountry scope and I think you
know a bit about that.
Speaker 2 (20:27):
Yes, true.
So thanks for the question.
Yeah, refit, refit, everywherewe can hear of it.
So we have the FinFRAC review.
Actually, well, because we alsoaffected, given that we have
our services providing inSwitzerland too.
So there's a FinFRAC review.
That started our consultationpaper actually this summer and
(20:47):
it's already.
Well, we already have experts,we're working together with
Essex on this and, yeah, so therefit again on FinFRAC, what
they're trying to do so increasetransparency, enhance also
legal certainty.
There is also the idea toinclude, like a harmonization
we're talking again theinternational standards also to
(21:10):
be alignment and et cetera.
So I think this is also wecould see that's within FRAC as
well.
There's going to be alsoupdates to capital requirements
for financial marketinfrastructures.
So that I intended to enhancebasically stability and
resilience.
What is interesting also thatthere was exemption for small
(21:33):
non-financial counterpartiesagain delay.
Well, basically, there's goingto be the reporting for them
only in 2028, from 1st ofJanuary.
So this was also announced bythe Federal Council of
Switzerland.
There's going to be centralizedreporting by FINMA.
So they want to also increasehow they're going to look at
(21:54):
data, how data quality, howthey're going to basically
ensure also utility all theprocesses and yeah, so I think
also they want to make it easierfor foreign supervisory
authorities to access Swisstrade repositories.
So the idea is to improve theidentification of global
stability risks and derivativemarkets.
(22:15):
But if you look at the FinFRACreview, so same as with the
others, so they want to staycompetitive, you know, in
Switzerland, with the market and, sure, aligned with
international standards and etc.
So so far it has been level oneregulation review and so it's
(22:36):
from what I have here andinsights that I have, so it's
going to be probably in summerand that next year that we're
going to have like a firstdispatch, then it's going to go
to parliamentary process, thenit's going to be revision of
amendments on ordinance, so it'slike technical standards in
here.
So we're going to have that,which we're going to look much
more closer from registrar side,because there, you know, the
(22:57):
devil's is in the details.
So we're gonna, we're gonnalook there, but the whole file
and everything we don't expectto have finalized until 2027 or
even 2028.
So but yeah, we are there, weare following up, so we have
refits on this side.
Sfcr 2.0 is coming, uh, dora,so lots of there, yeah well,
(23:20):
since I don't have enough onyour plate already and, I think,
over to finalize.
so we talked about uh hereeurope and third parties, uh,
third countries.
Here europe touched a bit ofunited states and I mentioned
before we had big bank ofelections, not just around the
eu, but also the?
Uh in the united states.
You know what's talking aboutand I think everyone was
(23:41):
actually looking closer to theseelections, but we are fans of
the, so I guess you didn't sleepovernight, as I decided,
definitely.
So I wanted to ask you, interms of the result of the
elections and how it couldaffect the financial sector of
the EU.
I know Trump has his ownprogram for financial sector, so
(24:03):
just to know, let's speculateand what you have here, what are
your views?
So?
Speaker 3 (24:09):
that's a very good approach.
Let's speculate on that alittle bit.
I'm pretty sure many of theminds in this room were also
awake that night seeing what wasgoing to happen.
I'm not sure it was entirely asurprise for many, but
definitely it's going to be amajor political turn for next
year.
Trump is taking office early inJanuary, so, as you mentioned,
(24:31):
we can only speculate.
There is still no big name.
There are names sounding around, but we still do not have the
roster.
But nevertheless, and because ofwhat we have heard in the media
lately, we can definitelyexpect some sort of shift
towards protectionism from theUS.
That can mean tariffs.
(24:53):
There can be also restrictionsto the provision of financial
services in the US.
So this is something thatdefinitely the EU needs to take
into account and also, if welook at the bigger geopolitical
scenario, it's very importantthat the Commission and the
Parliament start looking intobuilding that autonomous,
(25:17):
strategic autonomy that theyhave been also working on in the
past action plans.
Can this complicate therelation with the EU providers
or financial services?
I do think we need to keep aneye on, for example, in more
innovative industries such as,for example, digital assets or
(25:38):
financial technology, where theUS can be a bit more restrictive
and therefore impact ourbusinesses as we know them
nowadays.
But what is also true is thatthe industry has lined up for a
long, long time now in differentforums not just the political
ones, but I'm talking, forexample, about IOSCO, or I'm
(25:58):
talking about the WorldFederation of Exchanges, where
the industry builds those bestpractices from them for them,
the industry builds those bestpractices from them for them.
So that can also be a greatplace to try to streamline those
actions and and keep them asharmonized as possible, and
that's, um, in all honesty, whatI would like to see uh to to
maintain that relation with theus, as, as we know it um for now
(26:21):
.
But there is no doubt that theeu, uh, the EU needs to look
into its own challenges and,like I mentioned before, onto
those pockets of competitivedisadvantage, try to address
those as early as possible inorder to remain a competitive
player, not just with the US, bythe way, but with the rest of
the world, because we're seeinga rise in Asia and we're seeing
(26:43):
other places in the globe movingSouth America as well.
So it's definitely going to bea turning point, but I do
believe that with the next CMUoption plan.
Hopefully we'll be able toremain competitive.
Speaker 2 (26:58):
Hopefully.
Thank you very much, Filara.
Very good answer for that.
Speaker 3 (27:03):
Thanks to you and it was really nice chatting.
Actually, I think we will alsojoin the lunch, so if there's
any question, perhaps we canaddress that later.
Speaker 2 (27:13):
Yeah, and during the event as well, so I hope you
enjoyed our chat and thank youvery much, everyone for
listening.
Thank you.
Speaker 1 (27:24):
Okay, well, that's it for this episode and huge thank
you to.
Well, that's it for thisepisode.
And huge thank you to Pilar andOsrina there, and, frankly, I'm
going to be out of a job ifthis carries on Manuel.
So he's shaking his head at mein the virtual studio producers
booth.
Okay, fine, I'm going to moveon.
Thanks for that, manuel.
(27:45):
Okay, well, in that case, joinus on our linkedin page that's
linkedincom slash company, slashregister, hyphen tr, where you
can connect with osrina and withpilar and, of course, with
everyone else here in the show,with manuel, with myself, uh,
with john kernan, uh, nick bruce, uh, paulo lopez, uh, lara
rodriguez, uh, plus our manyspecial guests, and we'll be
(28:06):
back in March.
In the meantime, bye-bye.
This podcast is brought to you by RegistryR,
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the RegistryR team and specialguests expressing their personal
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There is no representation madeas to the accuracy or
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(00:28):
Hello and welcome back to theregistry art roundup podcast.
Yes, we're back with anotherspecial episode that was
recorded live a little whileback at the palacio de la bolsas
in madrid.
Yes, it's just me, andrew KeithWalker, and our producer, manuel
Moreno-Garcia, here in thevirtual studio to introduce two
(00:52):
very special speakers who had afireside chat at our annual
client event focused on theregulatory outlook for the
regtech industry, for thederivatives industry and for
capital markets, and looking atemerging trends and the
challenges facing the CapitalMarkets Union plans for 2025.
(01:16):
Our show is hosted this week byOsrina Yuskeviscuti, and Osrina
is joined by Pilar Martinez,who's the head of public affairs
for Europe and Latin America atBME6.
And together they unpick thethreads beyond EMEA refit in
(01:36):
terms of the broader regulatoryoutlook, the challenges that
were raised for the EU, forcapital markets and debt
management in the EU by theDraghi report and the broader
macro themes that are going tobe shaping 2025.
So, without further ado, let'sgo over to Ozrina Juskiewicz.
Speaker 2 (02:00):
Thank you.
Thank you, manuel, for such anice introduction and hello
everyone.
So I think we have heard a lotalready until now about EMI
Refit, uk Refit.
So just to let you know, we arenot here to talk about EMI
Refit or UK EMI Refit.
So from our side, what we wantto talk with you about is to
(02:20):
have a chat, because there is somuch more ongoing in Europe and
beyond Europe this year andalso next year.
So maybe just to start with thefirst topic to be Capital
Markets Union, right?
So this is the one that you, Iknow, really closely follow.
So there have been reports fromDraguleta earlier this year
(02:44):
about the future of EuropeanUnion and future financial
markets and they're telling that, well, the first and high
priority is to complete CMAU,right, and from your perspective
and from your view, do youthink what's completed is going
to solve all the problems andchallenges we have in the
financial sector?
Speaker 3 (03:05):
Well, thank you very much.
Sure, now we can hear eachother.
Well, good morning everyone,and thanks a lot for bringing
that question.
Definitely, draghi and Lettahave been something that has
been sitting on our desk sinceApril that the first report was
released, and your question wassuper specific.
I wish they were the key tofinalizing CMU, but it certainly
(03:30):
points out to a lot ofchallenges and a lot of issues
that the EU needs to look intoif they want to build that
capital markets union in thenext political cycle.
It touches upon elements suchas consolidation of
infrastructures, supervisoryarrangements, bringing retail
investors onto the table, whichis something that many other
(03:54):
places are already looking into,definitely, and so I do believe
they are a very good exercisetowards pointing to the
challenges that the EU needs tolook into for the next political
cycle.
However, those challenges needto be fixed somehow with
regulation, and that issomething that the Commission
(04:15):
specifically should be lookinginto the implications of
additional regulation.
You know very well our sectoris over regulated sometimes.
Jesus already mentioned that intheir in his opening speech.
So, um, that is something forpolicymakers to keep an eye on.
Simplify in existingregulations.
(04:35):
Let's also touch on draggy,anyways, but um, to me, what's
more important is that the euanalyzes the internal
differences, the comparativedisadvantages that are created
because many of the regulationsare not streamlined and are not
applied in a harmonized manner.
So perhaps that is somethingthat they could look into and
(04:57):
definitely considering therelation with third countries,
not just with the UK, whichmight be very close to us, but
also with the US and withSwitzerland.
That's a bit I wish I had thekey answer to it.
Speaker 2 (05:14):
I think that was very , very nice, olivia, so thank
you very much for that.
And well, digging a bit moreinto the European Union.
Well, we had elections rightthis year around the globe, but
also in the European Union.
And we had elections right thisyear around the globe, but also
in the European Union.
And we have a new commissionand, of course, as a next step,
we are awaiting their work planfor 2025.
(05:35):
Any ideas what we could expectthere?
Speaker 3 (05:39):
Well, only last week we had the hearings held at the
parliament and we have the fullcommission already pointed out.
So I think that's a very goodfirst step to begin with.
But, like I said, and I knowI'm repeating myself, but the
whole element around regulatoryburden, around administrative
burden for entities to complywith regulation, that is
(06:01):
something that the EU, and theCommission particularly, must
really look into.
What I do believe and it's alsotouched in Leta's report is
that the industry should have abigger role.
Having consultations with theindustry, having roundtables,
having some sort ofprivate-public collaboration
with the entities, can help theCommission understand better the
(06:23):
implications of theirregulation, what is needed, what
is not needed that much, whatneeds to be done in a different
way, and so creating thisinvolvement with the industry,
with it'll it'll be somethingthat we will very much um want
to see from from this newcommission.
But, um, we've spoken a lotabout regulation before and now,
(06:44):
and, although the commissionhas been on a break for a while,
they left a little bit ofhomework and they left Dora on
the table, so I was very muchhoping you could explain a
little bit on the topic.
Speaker 2 (07:00):
Yeah, definitely.
Well, dora, it's a big topicalready ongoing for two years
that I've been looking veryclosely.
So thanks for these questions.
Indeed, dora DigitalOperational Resilience Act is
going to come into place alreadynext year, so in less than two
months they're going to be DORAapplicable.
Well, the idea of this wholeregulation from the European
(07:33):
Europe is to enhance the ITsecurity and also to make
financial markets and financialentities more resilient.
Why we have this Zora and whywas the need actually of it.
And also, we're in the digitalage right that there are more
and more financial entities thatare kind of reliant on their
services to the ICT third-partyservice providers.
And when I say dependent orreliant, we are talking about
(07:55):
that 80% of the financialentities actually they're using
the ICT third-party serviceproviders for their critical
services.
So being so dependent serviceproviders for their critical
services, so being so dependent,this also increases
vulnerability to the cyberincidents, also to the
operational problems, and Ithink that could, if not managed
(08:16):
actually correctly, could alsocause to the other sectors and
also influence the biggereconomy.
And this is what we have beenlooking already, you know, from
the European Commission side andthey have seen that well
(08:37):
talking in the last five years.
There's like around 40% of ICTrelated incidents that a
financial sector has experiencedand basically 70% of all the
financial entities have at leastone significant incident last
year.
So most of ICT third-partyservice until now providers.
They were not regulated, or notat least in the same framework
like most of our financialentities are.
(09:00):
So, due to these reasons, therewas DORA created two years ago.
Well, two years ago it cameinto force and Palladia is in
the purposes, of course, toensure and to increase the IT
security in the financial sectorto make sure that financial
entities can withstand and alsorecover from the cyber incidents
(09:26):
.
There is also harmonization ofthe regulations that you also
mentioned before with the oldidea to harmonize the
requirements across the Europeand the member states and also
basically to centralize also therole of the supervisory
authorities.
So this would be the purposeand actually it's an
(09:47):
unprecedented regulation infinancial sector in terms of how
big it is Like really itaffects all financial entities.
So we're talking that all typesof financial entities are under
the scope of DORA, so banks, ofcourse, trade repos nor is that
registered we also are thereand also ICT third-party service
(10:08):
providers that are going to beassigned as critical.
So we're talking about morethan 22,000 firms in Europe that
are going to be affected bythis regulation.
So, yeah, it's really big andit's coming in less than two
months.
Speaker 3 (10:21):
Okay, that sounds challenging.
Definitely those numbers arehuge.
Is there any framework, anystructure beneath it?
Because I'm assuming for such abig file there must be a very
solid infrastructure behind.
Speaker 2 (10:36):
Yeah thanks God there is.
So there we have the five mainpillars, five key areas that you
can reach through the level onelegislation and also the
technical standards you canreach, you know, through the
level one legislation and alsothe technical standards.
You can go into more in details.
So just quickly to overlook.
So we have ICT risk management,of course.
So it's like lots of principlesand requirements on ICT risk
(10:58):
management framework, includingalso the governments and what
management board needs to do andwhat business continue plans
need to to entail what would beinternal controls.
Then we have also ICT riskmanagement framework.
So the idea is to harmonize howthe incidents are going to be
reported on the DORA.
(11:19):
So not all the financialentities so far are reporting
incidents.
So it's going to be harmonized.
We're going to have thetemplates format for everyone is
going to be the same and alsothe criteria, how we have to
report.
Then, of course, it's about theoperational resilience testing.
So this is also other pillar.
So they establishes, basicallyDORA establishes, like the basic
(11:42):
testing that all financialentities will have to do, and
then also it's going to beadvanced testing for some
entities that will be of hugesignificance, let's say so the
authorities will need to come tothem and will need to inform
that they will need to dospecific TLPT testing.
Then we're looking at managingof ICT third-party risk.
(12:04):
And when I'm talking aboutmanaging, so what DORA
establishes, so all thefinancial well, basically
responsibility it pulls underfinancial entity to make sure
you know that you manage thecontracts correctly of your ICT
third-party service providers,that you have all the provisions
in place, that you relate andmonitor the risk.
And this is also what is likereally big pillar that we are
(12:29):
working.
We're going to have a registerof information where we have to
put all the contracts in thereand based on that, the
supervisory authorities and ESASwill designate the critical
service providers and they wantto say which are the critical
service providers in Europe andwe're going to see the list of
it.
But we're talking about bigplayers.
I guess it's going to be Amazon, google, microsoft, the ones
(12:51):
that they really want to kind ofcontrol a bit.
And then we have informationsharing, which is voluntary, so
to have information sharedbetween the financial entities
on cyber threats and issuesbetween the financial entities
on cyber threats and issues.
So five main pillars, lots ofalso technical standards for
(13:11):
each of the pillars, sevenalready approved one.
We are still waiting becausethere was a dispute between the
commission and ESA regarding theuse of LEI.
But yeah, we are working on itProject established on our side.
We are blood circles with esmaon the workshops and it's really
, it's really big and it's notjust actually an european union
(13:33):
that's looking well.
We have torah, but inswitzerland we also have
operational resonance framework.
We also have in the unitedkingdom stand differently, but
this is the topic that isongoing and definitely next year
is going to one of the biggest,biggest topic after f it
definitely sounds like a lot ofwork.
Speaker 3 (13:52):
so, um, I'm sending you all um our best energy to
cope with it, but I think that'snot the only piece that was
left from the last commission.
And, um, I wanted to ask youabout SFTR.
Is it SFTR 2.0, right, sftr 2.0.
Sftr 2.0.
That's also an effort.
Sftr?
(14:12):
Yeah, exactly, but that hasbeen laying around a lot as well
, and I've heard some rumors,but perhaps you have a bit more
insight onto it.
Speaker 2 (14:21):
Yeah, so, yeah, you're right.
So I guess there are morerumors so far, but it was
mentioned actually in one of thecommission's report it's called
macro prudential framework fornon-banking financial
intermediaries that they'reexpecting the benefit of a CFTR.
So CFTR 2.0 in 2025 actually,and even to have the
(14:44):
consultation paper this year.
However, so far it's justrumors.
We haven't seen anything there.
Also, with the regulators thatwe have talked, we're still not
sure if that is coming At somepoint.
Of course it's going to come,because FTR came to force in
2016, and we started reportingin 2020, and we already have a
(15:06):
mirror fit.
So this is coming, but we don'tknow yet when.
But we can also make someassumptions actually what we
could expect from this FTR 2.0.
So, first of all, it's going tobe probably expanded scope, so
we're going to have alsonon-banking intermediaries that
will have to report sfts.
(15:26):
Look at what happened with amireffort.
We could also expect there'sgoing to be new fields added,
although sftr already has a lotlike.
Yeah, I know it's just likeadding any more fields to be
reported, but yeah, there shouldbe additional reporting fields.
I wrote it to enhance dataquality and ensure accurate
monitoring.
Well, that could be like fieldssuch as effective dates,
(15:49):
intra-group identifier,executing agent field and etc.
And of course, I would imaginethe FTR 2.0 would take into
account also operationalresilience and cybersecurity
factors, because it also wouldbe aligned with TORA.
What else security factors,because it's it's also would be
aligned with with torah and whatelse.
Well, esg is very big right nowand also affecting more and
(16:10):
more financial regulations, soit should be also foreseen
somehow to be reflected in sftr,ref it and giving them actually
also the scandals we have ineuro with the taxes.
So there is a rumor that it'salso be somehow related with the
tax compliance.
So I think that's what we couldexpect.
Again, still, the calculationswe don't know.
(16:32):
Even if it comes, you know therevision soon.
I don't expect in two, threeyears that we're going to have
it.
But you work with thecommission more you know, work
those corridors.
Speaker 3 (16:42):
So whenever you hear something, so just shout to us
so that we could be preferredand you know we'll be the first
to know about it.
Well, you can be sure, if Ihear anything, I'll let you know
right away, because that soundsalso like a lot of work.
Yeah, that's, that's gonna bebig and okay.
Speaker 2 (16:57):
So actually well before, you mentioned also about
the cooperation of thirdcountries and how to support
that.
You mentioned UK, you mentionedSwitzerland, united States.
So in your opinion, if there isno alignment with that third
country, so there is nocooperation, how it could be an
obstacle for EU and also foreconomic growth?
Speaker 3 (17:18):
Well, I think for the past two CMU action plans, the
Commission and the EU as a wholehas become aware of the need of
being integrated with the restof the world.
It's not just the EU on theirown anymore, but we need to
interact with other players andwe have a number of stakeholders
that we need to live up to,namely our clients, our issuers
and our investors.
(17:39):
So it is clear that the EUcannot afford any longer to move
in isolation and in this sense,for example, last week we read
about the report from ESMA aboutthe long awaited shift to 2
plus 1, the shortening of thesettlement cycle, and they
already came into agreement witha date it's going to be end of
(18:01):
2027, which pairs very well withthe UK, who had announced
already in the task force theiraim to shift also by end of 2027
, and also with Switzerland.
So I think this is a greatfirst step into addressing the
relation with third countriesand into placing the EU as a
(18:22):
real key stakeholder in theinternational environment.
But perhaps not just on T plusone, but on the rest of topics
and on the rest of regulationsthat we have, there's two
elements that I think need to betaken into account by our
policymakers.
And number one is that the EU isnot the US.
I know the policymakers look tothe US, which is fair and in
(18:46):
many cases, is the way to lookat them towards.
But because of the nature ofthe union and because of the
aims that it has, it's no longerjust capital markets, unions,
capital investments and savings,for example.
We cannot replicate everysingle thing that comes into the
US, that comes from the US.
We need to make it our own andit needs to stem from the very
(19:08):
own nature of the EU.
So that's perhaps somethingthat I would very much like to
see in our strategy with thecountries from now on.
And the second element and Iknow I touched briefly upon this
before, but I do think it willmake a difference is addressing
the comparative disadvantagesthat we have in the union
because of the differentapplication of regimes and I'm
(19:32):
talking mainly taxation, I'mtalking solvency and I'm talking
company law, for example whichthey remain within the
sovereignty of the differentmember states.
But applications that divergevery much from member to member
can create these pockets ofcomparative disadvantages which,
in the end, when you look atthe union from the outside, it
makes it less competitive as abloc.
(19:54):
So I do think that is somethingthat needs to be looked into
when we think about competitionwith countries and into creating
something that is aninvestor-friendly environment
for the next cycle.
Let's put it that way.
But if we talk about thirdcountries and about refits again
(20:15):
, I know that it seems to belike your favorite topic lately
I wanted to ask you aboutFinFrag Review, because that's
also something on the thirdcountry scope and I think you
know a bit about that.
Speaker 2 (20:27):
Yes, true.
So thanks for the question.
Yeah, refit, refit, everywherewe can hear of it.
So we have the FinFRAC review.
Actually, well, because we alsoaffected, given that we have
our services providing inSwitzerland too.
So there's a FinFRAC review.
That started our consultationpaper actually this summer and
(20:47):
it's already.
Well, we already have experts,we're working together with
Essex on this and, yeah, so therefit again on FinFRAC, what
they're trying to do so increasetransparency, enhance also
legal certainty.
There is also the idea toinclude, like a harmonization
we're talking again theinternational standards also to
(21:10):
be alignment and et cetera.
So I think this is also wecould see that's within FRAC as
well.
There's going to be alsoupdates to capital requirements
for financial marketinfrastructures.
So that I intended to enhancebasically stability and
resilience.
What is interesting also thatthere was exemption for small
(21:33):
non-financial counterpartiesagain delay.
Well, basically, there's goingto be the reporting for them
only in 2028, from 1st ofJanuary.
So this was also announced bythe Federal Council of
Switzerland.
There's going to be centralizedreporting by FINMA.
So they want to also increasehow they're going to look at
(21:54):
data, how data quality, howthey're going to basically
ensure also utility all theprocesses and yeah, so I think
also they want to make it easierfor foreign supervisory
authorities to access Swisstrade repositories.
So the idea is to improve theidentification of global
stability risks and derivativemarkets.
(22:15):
But if you look at the FinFRACreview, so same as with the
others, so they want to staycompetitive, you know, in
Switzerland, with the market and, sure, aligned with
international standards and etc.
So so far it has been level oneregulation review and so it's
(22:36):
from what I have here andinsights that I have, so it's
going to be probably in summerand that next year that we're
going to have like a firstdispatch, then it's going to go
to parliamentary process, thenit's going to be revision of
amendments on ordinance, so it'slike technical standards in
here.
So we're going to have that,which we're going to look much
more closer from registrar side,because there, you know, the
(22:57):
devil's is in the details.
So we're gonna, we're gonnalook there, but the whole file
and everything we don't expectto have finalized until 2027 or
even 2028.
So but yeah, we are there, weare following up, so we have
refits on this side.
Sfcr 2.0 is coming, uh, dora,so lots of there, yeah well,
(23:20):
since I don't have enough onyour plate already and, I think,
over to finalize.
so we talked about uh hereeurope and third parties, uh,
third countries.
Here europe touched a bit ofunited states and I mentioned
before we had big bank ofelections, not just around the
eu, but also the?
Uh in the united states.
You know what's talking aboutand I think everyone was
(23:41):
actually looking closer to theseelections, but we are fans of
the, so I guess you didn't sleepovernight, as I decided,
definitely.
So I wanted to ask you, interms of the result of the
elections and how it couldaffect the financial sector of
the EU.
I know Trump has his ownprogram for financial sector, so
(24:03):
just to know, let's speculateand what you have here, what are
your views?
So?
Speaker 3 (24:09):
that's a very good approach.
Let's speculate on that alittle bit.
I'm pretty sure many of theminds in this room were also
awake that night seeing what wasgoing to happen.
I'm not sure it was entirely asurprise for many, but
definitely it's going to be amajor political turn for next
year.
Trump is taking office early inJanuary, so, as you mentioned,
(24:31):
we can only speculate.
There is still no big name.
There are names sounding around, but we still do not have the
roster.
But nevertheless, and because ofwhat we have heard in the media
lately, we can definitelyexpect some sort of shift
towards protectionism from theUS.
That can mean tariffs.
(24:53):
There can be also restrictionsto the provision of financial
services in the US.
So this is something thatdefinitely the EU needs to take
into account and also, if welook at the bigger geopolitical
scenario, it's very importantthat the Commission and the
Parliament start looking intobuilding that autonomous,
(25:17):
strategic autonomy that theyhave been also working on in the
past action plans.
Can this complicate therelation with the EU providers
or financial services?
I do think we need to keep aneye on, for example, in more
innovative industries such as,for example, digital assets or
(25:38):
financial technology, where theUS can be a bit more restrictive
and therefore impact ourbusinesses as we know them
nowadays.
But what is also true is thatthe industry has lined up for a
long, long time now in differentforums not just the political
ones, but I'm talking, forexample, about IOSCO, or I'm
(25:58):
talking about the WorldFederation of Exchanges, where
the industry builds those bestpractices from them for them,
the industry builds those bestpractices from them for them.
So that can also be a greatplace to try to streamline those
actions and and keep them asharmonized as possible, and
that's, um, in all honesty, whatI would like to see uh to to
maintain that relation with theus, as, as we know it um for now
(26:21):
.
But there is no doubt that theeu, uh, the EU needs to look
into its own challenges and,like I mentioned before, onto
those pockets of competitivedisadvantage, try to address
those as early as possible inorder to remain a competitive
player, not just with the US, bythe way, but with the rest of
the world, because we're seeinga rise in Asia and we're seeing
(26:43):
other places in the globe movingSouth America as well.
So it's definitely going to bea turning point, but I do
believe that with the next CMUoption plan.
Hopefully we'll be able toremain competitive.
Speaker 2 (26:58):
Hopefully.
Thank you very much, Filara.
Very good answer for that.
Speaker 3 (27:03):
Thanks to you and it was really nice chatting.
Actually, I think we will alsojoin the lunch, so if there's
any question, perhaps we canaddress that later.
Speaker 2 (27:13):
Yeah, and during the event as well, so I hope you
enjoyed our chat and thank youvery much, everyone for
listening.
Thank you.
Speaker 1 (27:24):
Okay, well, that's it for this episode and huge thank
you to.
Well, that's it for thisepisode.
And huge thank you to Pilar andOsrina there, and, frankly, I'm
going to be out of a job ifthis carries on Manuel.
So he's shaking his head at mein the virtual studio producers
booth.
Okay, fine, I'm going to moveon.
Thanks for that, manuel.
(27:45):
Okay, well, in that case, joinus on our linkedin page that's
linkedincom slash company, slashregister, hyphen tr, where you
can connect with osrina and withpilar and, of course, with
everyone else here in the show,with manuel, with myself, uh,
with john kernan, uh, nick bruce, uh, paulo lopez, uh, lara
rodriguez, uh, plus our manyspecial guests, and we'll be
(28:06):
back in March.
In the meantime, bye-bye.
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