WFE welcomes EU’s principles-based approach to digital resilience
17 February 2021 UK
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The World Federation of Exchanges (WFE), the global industry group for exchanges and central counterparties (CCPs), has responded to the EU’s proposals for a Digital Operational Resilience Act (DORA) for financial sectors.
The WFE says it welcomes the ambitions of the EU Commission in seeking to improve and harmonise operational resilience requirements across the financial ecosystem – especially those purely operating in digital-based environments.
In addition, the WFE recognises the commission’s desire to ensure accountability and to have appropriate oversight capabilities of important ICT service providers.
However, WFE explains that meeting that objective does not need to be at the cost of having disproportionate requirements levelled against firms which do not have the accompanying risk profile to warrant them.
It highlights that straying from the principle of proportionality could unfairly and unnecessarily promote market fragmentation.
“Getting that approach right is integral to encouraging cross-border trade and promoting the EU as a business-friendly environment with safe and efficient markets,” says WFE.
The WFE has a particular concern that aspects of market-data service provision may also be inappropriately captured and subject to prohibitive requirements under DORA.
The current definitions employed by the Commission to determine what constitutes an ICT service provider, and also what is deemed to be a ‘critical’ one, appear ambiguous and could lead to confusion in implementation, WFE suggests.
The WFE outlines that better understanding of how market-data service provision would be classified is required – especially if derived from a provider operating from a third-country.
Additional clarity, with appropriate regulatory application, that accurately reflects the risk profile of such service provision, would also be welcomed by the WFE.
Nandini Sukumar, CEO of WFE, comments: “We strongly support the commission’s ambitions for improving operational resilience across all sectors of the financial services industry. Ensuring that the measures used in achieving those ambitions are fair and proportionate is integral to their success in the long run.”
“As a global organisation we would also emphasise the importance of observing international guiding rules when considering new requirements and for further consideration to be given to how the regulatory approaches of third-countries can be recognised by the EU, to avoid ICT service provision being unnecessarily inhibited,” adds Sukumar.
The WFE says it welcomes the ambitions of the EU Commission in seeking to improve and harmonise operational resilience requirements across the financial ecosystem – especially those purely operating in digital-based environments.
In addition, the WFE recognises the commission’s desire to ensure accountability and to have appropriate oversight capabilities of important ICT service providers.
However, WFE explains that meeting that objective does not need to be at the cost of having disproportionate requirements levelled against firms which do not have the accompanying risk profile to warrant them.
It highlights that straying from the principle of proportionality could unfairly and unnecessarily promote market fragmentation.
“Getting that approach right is integral to encouraging cross-border trade and promoting the EU as a business-friendly environment with safe and efficient markets,” says WFE.
The WFE has a particular concern that aspects of market-data service provision may also be inappropriately captured and subject to prohibitive requirements under DORA.
The current definitions employed by the Commission to determine what constitutes an ICT service provider, and also what is deemed to be a ‘critical’ one, appear ambiguous and could lead to confusion in implementation, WFE suggests.
The WFE outlines that better understanding of how market-data service provision would be classified is required – especially if derived from a provider operating from a third-country.
Additional clarity, with appropriate regulatory application, that accurately reflects the risk profile of such service provision, would also be welcomed by the WFE.
Nandini Sukumar, CEO of WFE, comments: “We strongly support the commission’s ambitions for improving operational resilience across all sectors of the financial services industry. Ensuring that the measures used in achieving those ambitions are fair and proportionate is integral to their success in the long run.”
“As a global organisation we would also emphasise the importance of observing international guiding rules when considering new requirements and for further consideration to be given to how the regulatory approaches of third-countries can be recognised by the EU, to avoid ICT service provision being unnecessarily inhibited,” adds Sukumar.
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