FinTech and the Securities Market | Local company
Trinidad and Tobago Securities Commission
AS THE regulator of the securities industry, the Trinidad and Tobago Securities Commission (TTSEC) is responsible for monitoring the sector, understanding its development potential and encouraging innovation to foster this development. This week’s article will highlight some leading fintech products typically used in the securities market.
Internationally, innovative products, known as financial technologies or “Fintech”, are increasingly present. From robo-advisers to crowdfunding platforms, technological developments are changing the financial services industry. These changes create both opportunities and challenges for entrepreneurs, consumers and regulators. The term “financial technology” is used to describe new technologies that aim to improve and automate the delivery and use of financial services. It is often seen today as the new marriage of financial services and information technology. The advent of Fintech requires TTSEC to understand how to best apply current rules, principles and practices to innovative financial technologies and non-traditional business models.
This Fintech evolution takes place in the context of various global trends including:
1) Growth in computing power – The growth in computing power can be observed as follows:
a. lower costs for data storage, processing and collection;
b. the exponential increase in accessible data and data sources;
vs. the emergence of infrastructures and platforms where data can be shared; and
re. the number of applications under development that contribute to the emergence and growth of the various categories of FinTech.
2) Wider accessibility – The Internet has facilitated global connectivity and greater access to products and services.
3) Increased disintermediation and reintermediation – Innovative fintech business models are disintermediating and reintermediating certain regulated activities. For example, some international fintech platforms provide intermediation services for stock placements, leading to the disintermediation of exchanges and underwriters.
Innovative Fintech companies are already offering competing products and services in many key business areas of traditional intermediaries, including payments, wealth management, investment banking, retail banking, lending and banking functions. Treasury. In addition, there are potentially even more innovative business models to come, such as artificial intelligence-based research, investment and trading (which use online platforms) and decentralized and borderless registries combined. self-executing contracts. Here are some fintech products / services commonly seen in the securities market:
1) Funding Platforms – This includes Peer-to-Peer Lending (P2P) and Equity Crowdfunding (ECF). These alternative funding platforms bring together businesses and individuals seeking capital with others who have money to lend, invest, or give. P2P lending is a business model that in many cases allows investors, alone or with others, to provide financing to borrowers. Lenders / investors can earn monthly interest in addition to principal repayments. ECF is a business model that allows individuals to invest in a business, typically a start-up or start-up business, in exchange for shares in that business.
2) Retail and Investment Platforms – A review of technology-based retail and investing shows a growing variety of not only online trading and investing platforms, but also technologies that support the decision-making of retail investors on these platforms. This includes comparison websites, financial aggregator platforms, and robo-advisers. Comparison websites allow investors to compare the price and features of banking, insurance and investment products before buying or investing. Financial aggregator platforms give investors an overview and therefore better control of their spending. Robo-advisers aim to change the economics and scalability of providing advice, including to traditionally underserved segments. From a business perspective, financial institutions incur lower costs when providing advice through automated tools because these tools require fewer people to be employed. Additionally, financial institutions offering robotics advice are able to access a wider range of clients who might opt to use online channels rather than face-to-face interaction.
3) Distributed Ledger Technologies (DLT) – This includes the application of blockchain technology and shared ledgers to securities markets. A distributed ledger is a consensus of replicated, shared and synchronized digital data geographically spread across multiple sites, countries and / or institutions. Distributed Ledger Technologies (DLT) are technologies used to implement distributed ledgers.
The ubiquitous nature of Fintech and other digital innovations in the financial sector have the potential to transform the securities industry in Trinidad and Tobago and enhance our global attractiveness for investment potential. This transformation can improve market efficiency while reducing transaction costs and encouraging the growth of the local securities industry. Although such opportunities exist, innovation without appropriate institutional guarantees can present serious risks to investors and have a negative impact on the stability of financial markets.
TTSEC intends to create a long-term, holistic approach to drive innovation and growth in Trinidad and Tobago’s securities industry, while ensuring strong investor protection, market integrity and security. financial solidity. As a result, TTSEC has developed an internal policy position on Fintech which is based on four fundamental pillars: stakeholder collaboration, knowledge, regulatory oversight and safety, as illustrated in Diagram 1.
Accessible on TTSEC’s Investor Education (IE) website, www.investucatett.com, is a fintech pledge, where investors and individuals can learn about financial technologies and understand how they work. : https://investucatett.com/caribbean -fintech-gage-initiative /.
For more information on the securities market, visit our website at www.ttsec.org or on the IE website and follow us on Facebook; Twitter; Instagram and YouTube.