“The goal is not just to check boxes”

Video | At this year’s PostTrade 360° Nordic conference, Alex Dockx from JP Morgan, delivered an insightful overview of the post-trade regulatory landscape in his session titled “Post-trade regulation – the COMPLETE overview (Wednesday edition).” He examined the latest regulatory shifts, the rising emphasis on sustainability, and the technological advancements reshaping the industry.

“Investor appetite is shifting,” remarked Dockx, when highlighting the growing importance of sustainability in finance, especially through ESG (Environmental, Social, and Governance) regulations. He notes that stakeholders are increasingly focused on more than just financial returns. “It’s not only about generating the right returns, but it’s also doing something good.” He cited the Corporate Sustainability Reporting Directive (CSRD) as a pivotal regulation driving this shift toward greater corporate responsibility and transparency.

Brexit’s impact on regulatory divergence was another critical topic. Dockx compared the UK’s post-Brexit regulatory framework with the EU’s approach, stating, “While the EU continues to focus on detailed rule making, the UK has adopted a more principles-based approach with initiatives like the Edinburgh Reforms.” He suggested that this flexibility might benefit the UK in the long run, saying, “Instead of having a lot of detailed rules, the UK looks at what the objectives are.”

The transition to T+1 settlement cycles, particularly in the US, also came under scrutiny. Dockx explained the global implications: “How does that work for people in Europe and Asia? The conversation about international investors came relatively late.” He underscored the complexities involved in aligning settlement cycles across various markets, stressing the necessity for global cooperation.

DLT

Dockx also discussed technological innovations like distributed ledger technology (DLT) and its transformative potential in post-trade processes. He acknowledged the reluctance of regulated institutions to fully embrace digital assets due to regulatory uncertainties, stating, “The problem isn’t the technology; it’s the lack of proper regulation.” This highlights the urgent need for clearer guidelines to facilitate the adoption of DLT and other innovations.

A significant focus of Dockx’s presentation was on the anticipated release of the Shareholder Rights Directive review and the FASTA (Faster and Safer Tax Relief of Excess Withholding Taxes) directive. He explained, “Tax used to be quite national… but FASTA will unify and digitise the process,” which promises to streamline tax relief processes across Europe. He also argued that the digitisation and harmonisation of Certificates of Tax Residence (COTRs), will simplify tax procedures for investors.

Continuous adaptation

As he delved into resilience in the financial sector, Dockx stated, “We need to make sure we can not only prevent outages or cyberattacks but also that if they do happen, we get back into business sooner.” This reinforces the need for robust systems and contingency plans to address future disruptions.

Dockx concluded his session by emphasising the importance of continuous adaptation. “The goal is to achieve a safe and resilient infrastructure, not just to check boxes,” he remarked, urging firms to stay agile and proactive as they navigate the evolving regulatory and technological landscapes. As Dockx highlighted, the post-trade environment is increasingly pivotal, especially in light of recent geopolitical developments, and it is essential for firms to invest in the innovations that will define the future of finance.

Speaker:
Alex Dockx, Executive director of Industry Development, JP Morgan

This session was hosted by JP Morgan

• The consolidated PostTrade 360° Nordic conference, in Stockholm on 4–5 September 2024, came to host 1,200+ delegates and featured 70 sessions.
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