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Esma earmarks data and tech innovation in 5-year plan

Data, ESMA, techEurope’s main financial watchdog has put technology innovation and data analytics at the heart of its strategy for the next five years.

The European Securities and Markets Authority (Esma) released its 2023-2028 roadmap, which includes five strategic priorities.

Alongside strengthened supervision, financial stability, retail investor protection and sustainable finance, the regulator intends to focus on “facilitating technological innovation and effective use of data”.

Esma will “ensure that financial regulation does not hinder innovation” while maintaining a “level playing field” between emerging players and traditional participants, stated the regulator.

The rise of crypto and digital assets has posed several tricky questions for supervisors regarding how various assets are classified and what laws and obligations should be placed on the various service providers in the space.

The chosen strategy for many supervisors is to somehow bring these assets into existing frameworks rather than create entirely new rules.

Esma states that its focus will be “assessing the impact of technologies used in financial markets on the existing regulatory framework and implementation of the upcoming legislation in the space”.

EU lawmakers have only recently passed the landmark Markets in Crypto Assets regulation designed to create a common framework for digital assets.

Esma has also stated that it will “further strengthen its role as data and information hub in the EU and contribute to extending the effective use of data in financial market supervision”.

Data will be critical to the ongoing efforts to regulate sustainable finance and limit greenwashing. And in addition to using analytics to inform its own activities, Esma also intends to take a greater role in overseeing the activities of the main data reporting service providers in Europe. In July, it stated that it would be directly regulating a number of data reporting service providers, including Euronext Paris, Bloomberg, Nasdaq Stockholm, MarketAxess, Tradeweb and AQ Metrics.

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