Governing the Digital Finance Value-Chain in the EU: MIFID II, the Digital Package, and the Large Gaps between! [chapter]

Emilios Avgouleas, Alexandros Seretakis
2021 Digital Finance in Europe: Law, Regulation, and Governance  
The emergenceo ft he completed igitization of the financial services value chain has gathered pace due to the advent of the Covid-19 pandemic. It is mainlyp remised on automation of the investment process through the use of algorithmic tools and remoted elivery of services via integratedp latforms and apps.D uring the samep eriod, we have witnessed the emergence of decentralised finance, cryptocurrencies aside,a nd the increasedu se of blockchain technology.T ogethert hese developments promise
more » ... adical changes in market structure and microstructure. The digitization of the finance value chain could cause respectivelymore market concentration or converselyradical democratisation of investment markets.F or this reason, the choicesofpolicy-makers will be of cardinal importance. At the sametime,digitisation is the best opportunityso far to createafullyintegratedEUmarket for new listings and secondary trading in securities, and to further SMEaccess to finance, thus making reality the vision of an EU Capital Markets Union. While these developments raise critical challenges for EU policy-makers in the post-Brexit era, the regulatory landscape in the EU is still dominatedb yt he older MIFID II approach to market regulation. Reform attemptss eem over-cautious and unwilling to unleash the powerful forces of technology and innovation to avoid upsetting settled industry practices (and incumbent oligopolies). EU Regulation has to become more proactive fostering regulatory experimentation in tandem with technological one to make sure that consumers interests are safeguarded, competition is furthered, and essential finance infrastructure is not dominated by at ight rent-seeking oligopoly. Therefore, the EU Digital Financep ackage in its present form is aw elcomey et timid step forward. An umber of further reforms are required to accelerate the pace of regulatory adaptation to the challenges and opportunities of the new digital eraf or European markets strengthening post-Covid 19 economic recovery. Emilios Avgouleas, Chair in InternationalB anking Law and Finance, University of Edinburgh; Vis. Professor,S chool of European PoliticalE conomy,L uiss Guido Carli. Alexandros Seretakis, LL.M (UCL, NYU), Assistant Professor of Law (Capital Markets/Financial Services), Trinity CollegeD ublin. We arev eryg rateful forc onstructive comments to Dr Heikki Marjosola, the co-editor of thiss pecial issue, and the participants of the joint Edinburgh-Helsinki webinar on Digital Finance in Europe. OpenAccess.
doi:10.1515/9783110749472-002 fatcat:wjtkp2nwi5dyznzh7dlvthimfq