BME and Deloitte analysed the challenges of the regulatory context in the capital markets

BME collaborated with Deloitte in its fourth conference on "Challenges of the regulatory context in capital markets". The conference took place on 4 April at the Palacio de la Bolsa de Madrid. Throughout the event, various participants from the post-trade industry offered their points of view on regulation, innovation and digitalisation.

On behalf of BME, Francisco Béjar, CEO of Iberclear, discussed the implications of the future reduction of the settlement cycle to T+1. This is a change that will bring significant long-term benefits, such as collateral savings and a reduction in counterparty risk, but at the same time he questioned whether the current levels of settlement efficiency will ever be reached and whether this may at some point lead to a change in the current penalty system. At the conference, it was explained that participants should be very cautious to the non-automated processes, the possible increase in the number of defaults and the reduction to almost 2 hours to carry out all reporting and reconciliation processes.

Francisco Béjar also announced that BME has recently presented an initiative to participate in the Eurosystem's wCBDC experimentation programme to test the issuance of a bond whose life cycle is managed in DLT technology, both for securities and cash settlement. This is an initiative in which a large part of the Spanish financial community will participate.

During the conference, it was made clear that the post-trading industry plays a fundamental role in the stability of the financial sector and brings together a large number of processes that can be improved with the use of new technologies such as AI or DLT technology. To continue to provide a great service to customers, depositaries and custodians must invest in innovation in real use cases that improve processes.

It also became clear that the role of the depositary and custodian is becoming increasingly important. A good example of this is the custody of crypto-assets where custodians will play a very important role as they do in the traditional world. However, participating in all these new businesses is an operational, regulatory and business challenge for the whole industry.

On the other hand, it was commented that security tokens are here to stay and will be a reality in the coming years. However, we have to think not only about the cost reduction that the use of DLT technology can bring, but also about the real value and how these security tokens can improve the usability and functionalities of the traditional financial market.

The wCBDC's experiment with a collaborative approach can provide differential value for the Eurosystem. This will allow, working as an industry, to share the benefits and the main drawbacks of the aspects that the ECB proposes to analyse (interoperability, security, operational improvement, etc.).

You can find more information about Iberclear on its website.