The positive side of regulation: Highlights from FinanceFeeds Cyprus FX Industry Seminar

Maria Nikolova

Investment firms may make use of the data they send to regulators and benefit from such an approach, industry experts comment.

The latest developments on the regulatory front, especially the GDPR and the new rules by ESMA for CFDs and binary options, have piled up an additional burden on the online trading industry. The warnings about the effects of these new rules have been various, including one about the negative impact the GDPR rules might have on AI systems.

And yet, the picture is not merely black and white, as shown by today’s panel discussion entitled “How to stay ahead of regulations”. The discussion, which was moderated by FinanceFeeds’ CEO Andrew Saks-McLeod,  took place during the FinanceFeeds Cyprus FX Industry Seminar that was held at the St Raphael Resort in Limassol, Cyprus. The participants – Panagiotis Nikolaou, Head of Investment Compliance Strategy at Leverate; Alexandros Constantinou, Director at MAP S.Platis; and Yasha Polyakov, CEO of Leverate, shared their views on the current regulatory situation and on how to deal with tomorrow’s regulations.

The discussion started with Alexandros Constantinou noting some of the paradoxes posed by the latest batches of rules rolled out. The particular clash is GDPR v MiFID2. For instance, firms might have to deal with a client’s request to delete his/her data but then, at the same time, a regulator is asking them to keep the data for five years.

Of course, the negative side of heavy costs of implementing the necessary solutions in order to comply with the heavy regulatory load was also mentioned.

More interestingly, however, the panel participants noted the positive side of the new rules. As Panagiotis Nikolaou put it – one can look at these new rules as an opportunity too.

Yasha Polyakov added that one such opportunity with big potential for firms is to make use of the data they send to regulators. Whereas many brokerages still do not do that, they may benefit from such an approach by using the data for internal checks, segmentation, etc.

Alexandros Constantinou noted that such data is already used by firms for detecting abusive trading practices by traders.

Panagiotis Nikolaou stressed how MiFID2 actually increases transparency: firms can easily prove to the regulator that they are compliant. On top of that, the new regulations result in the building of synergies among market participants.

Concluding the session, the panelists agreed on the crucial role of regtech as an ancillary service for the FX industry.

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