In today’s fintech A.M, systemic roadblocks represented by the delay of new rules on dark pool trading in the MiFID II and ongoing economic uncertainty post-Brexit have not hampered the innovative drive of fintech companies in introducing new solutions to old problems.
Much Ado about MiFID II
The European Securities and Markets Authority (ESMA) has delayed the introduction of new rules on dark pool trading, a key part of its MiFID II initiative. Originally conceived to increase transparency in equity trading, these revisions will now be delayed for at least three months as regulators work with trading venues to compile the data necessary to make the measure effective.
Dark pools, or colloquially referred to as trading “in the dark”, are private execution venues run by banks, exchanges or independent operators that only disclose prices once a trade has already been made. This opaque arrangement is popular with trading firms and fund managers keen to avoid any market impact from transacting large volumes on public exchanges. Far from being niche, a staggering 45% of European daily volume of shares traded is conducted at these venues or at banks.
On the other hand, Thomson Reuters has decided to seize the profitability reins of the new regulatory Goliath by launching a comprehensive suite of solutions to assist financial institutions with ensuring ongoing compliance with MiFID II requirements. This includes updated instrument reference data capabilities for 1.6 million new pre-fixed individual identifiers (ISINs) for over-the-counter (OTC) derivatives from the ANNA Derivatives Service Bureau (DSB); coverage of 300,000 new financial instruments; additional data for 900,000 existing instruments; and the addition of over 5 million records from the Financial Instruments Reference Data System.
Millenials and Money
Petal, a fintech company that aims to provide credit cards to young people and others who lack a credit history, has raised $13 million; it has said on Wednesday. The new funding will be used to expand Petal’s team, which already consists of veterans from the likes of JPMorgan Chase, Capital One, AmEx, PayPal and the CFPB’s Office of Regulations. The new burst of funding will also help roll out the card to a waiting list consisting of “thousands”.
The US credit card startup is abandoning traditional credit scoring in favour of ‘Cashflow Underwriting’, which uses machine learning and “common sense” to analyze, in real-time, an individual’s digital financial record. The use of non-traditional data intergrates the underbanked — millennials, immigrants and other consumers who are typically shut out from credit lending facilities by banks and lenders because of their limited credit histories.
Brexit Banality
A gloomy report from Cambridge Econometrics outlines the predictable impacts of a a no-deal Brexit on employment, with severe estimates putting the figure of potential job losses at 500, 000. The drop in vacancies will be most palpable in the finance sector, where recruitment has already begun to slow down. A no-deal Brexit is also expected to shave off at least 3 percentage points of the UK’s GDP growth until 2030.
A Shot in the Dark
Photo firm Kodak has announced its plans to create KodakCoin, a cryptocurrency of its own, to help photographers to control their image rights via a distributed ledger. It also plans to develop Bitcoin mining rigs at its New York headquarters, which it will rent out to aspiring miners for an upfront fee via its Kodak KashMiner scheme. While its tech-forward announcements have precipitated a 120% increase in the firm’s share price, many are quick to point out the irony of situation : Kodak’s notoriously slow uptake of the first digital wave in the late 90’s nearly rendered the company obsolete in the rise of digital cameras and photo-taking smartphones.