On November 14, the SEC hosted its first Fintech Public Forum at its Washington, DC headquarters to discuss FinTech and to evaluate how the current regulatory environment can most effectively address innovation in the financial services industry. The event was divided into four panels, which covered the following topic areas: (i) the impact of recent innovation in investment advisory services; (ii) the impact of recent innovation on trading, settlement, and clearance activities; (iii) the impact of recent innovation in capital formation; and (iv) investor protection in the FinTech era. The forum was open to the public and is also available on the SEC’s website.
SEC Chair Mary Jo White opened the forum with introductory remarks. After explaining that “Fintech innovations have the potential to transform key parts of the securities industry,” Chair White highlighted several developments that are particularly important to the SEC, including: (i) automated investing advice; (ii) distributed ledger technology; and (iii) online marketplace lenders and crowdfunding portals. In describing the SEC’s role with respect to such innovations, Chair White noted that the Commission “must ensure new developments are not rushed to market or implemented in a way that facilitates a risk of fraud or harm to investors.” Ms. White explained that she had “directed the creation of a Fintech working group at the SEC earlier this year . . . to evaluate the emerging technologies,” and tasked the group to provide “specific, tailored recommendations . . . about what the SEC should do to provide clarity on existing regulatory requirements and help foster responsible innovation.” Chair White also clarified that the SEC was at an early stage in its outreach to investors, innovators and other stakeholders in new technologies, with the forum being an important part of SEC’s outreach.
SEC Commissioner Michael Piwowar, who championed the idea of the Commission hosting a Fintech public forum, also spoke to attendees. “I believe the commission should take the lead regulatory role in the Fintech space,” Piwowar said in prepared remarks. “Many of the firms pursuing Fintech are already SEC registrants, and others are providing services that are squarely within the commission’s oversight, such as investment advice and trading and settlement functionalities.” Piwowar emphasized the need for clarity in the sector, but added that the SEC is “uniquely situated to determine whether and how Fintech currently fits, and ultimately should fit, within a financial regulatory structure.”