At the 11th EU Prospectus and Primary Market Issuance Conference held on 24th September, 2020, Adam Shaw our Founder speaks to Jessica Walker of Clifford Chance, and Robert Koller of eppf.eu as part of a panel discussion on how FinTech can build efficiencies and digitize the capital markets ecosystem. Many thanks to IFRL and Jessica for her thought provoking questions, Robert for his cutting edge insights from the forefront of debt markets, and all the participants who tuned in to listen.
Machines and humans working in harmony: Technology will not push out the human element. There will always be a very clear key role for lawyers, advisers, and advisers. We don’t’ envision a scenario where interpretation of complex laws and business judgements is fully automated. We believe in a staged approach where technology makes that process more efficient and easier for those parties, so that they can do their jobs quicker and more efficiently.
Trends and drivers of change: We’re getting strong tailwinds from the COVID19 changes to working practices, coinciding with two other key drivers; regulatory change, and early adopters. Online tools and cloud based solutions are becoming much more important, and capital markets are moving towards an API-enabled environment. On the regulatory side the High Level Forum on Capital Markets Union is pushing for an EU-wide single digital access, ESMA is driving for machine readable digitised financial and non-financial reporting, while efforts around the Prospectus Regulation are envisioning a digital prospectus future. Early adopters of tech and more disruptive exchanges, are looking to challenge the norms by reengineering the process and documentation, which in turn is pushing tech penetration with more traditional players.
Tech can ease regulatory compliance: To drive the costs of raising capital down, we are seeing a drive towards more lax regulations, which is an effort not to be taken lightly. We believe we should not overly loose the checks and balances that protect companies and investors, but instead we should use technology to improve the efficiency of regulations and ease compliance.
Cost of Capital for SMEs: Everyone wants to reduce the cost of capital. Going public and staying public is too costly and time consuming, especially for SMEs. Digital solutions such as Scribestar can significantly cut the costs of going public and staying public already today.
Developing Markets: We also believe tech can significantly speed up the convergence of developing markets, and have companies in those countries access public markets easier. This allows them to benefit from a wider investor base, while crating a data flow for investors to help them understand those markets better.
Vision for the future: Capital markets of the future are a single digital ecosystem where all the processes and participants collaborate and work on a standardised structured data format. We’ll see a move to a completely digital prospectus where information flows seamlessly to the issuers, exchanges, investors, regulators and other market participants.