Fintech
Dalia Blass to Conclude Tenure as Director of the Division of Investment Management
Washington, D.C.–(Newsfile Corp. – December 22, 2020) – The Securities and Exchange Commission today announced that Dalia Blass, Director of the Division of Investment Management, will depart the SEC in January after leading the Division since September 2017. Under her leadership, the Division finalized more than 70 regulatory initiatives affecting investment companies and investment advisers.
The Division of Investment Management’s work is critical to ensuring that America’s Main Street investors have access to high-quality investment opportunities from which they can make well-informed investing decisions. It has primary responsibility for administering the Investment Company Act of 1940 and the Investment Advises Act of 1940, which includes overseeing investment companies (e.g., mutual funds, closed-end funds, business development companies, unit investment trusts, variable insurance products, and exchange-traded funds) and investment advisers.
“Both quantitatively and qualitatively, the work advanced by the Division of Investment Management over the last three years is a testament to Dalia’s leadership, extensive experience within the agency, and commitment to America’s investors,” said SEC Chairman Jay Clayton. “In every action, Dalia has made it abundantly clear that her top priority is the interests of our long-term Main Street investors, who often rely on investment products to effectively establish and maintain a diversified investment portfolio. Her experience and deep knowledge of the industry and the federal securities laws have been invaluable as we’ve modernized outdated regulations and navigated a global pandemic, all while seeking to increase the industry’s resiliency and accommodate investor-oriented innovation.”
“It has been the honor of a lifetime to work together with the women and men of Investment Management and the Commission to modernize the existing regulatory framework and find forward-looking solutions that solve not only today’s issues, but anticipate those to come,” said Ms. Blass. “From serving as a member of staff to division director, my time here at the Commission has been the one of the most rewarding experiences of my career. Thank you to Chairman Clayton for offering me this incredible opportunity and for his unwavering support of the Division’s priorities and efforts. And thank you to my colleagues for your unparalleled dedication, insight, wisdom and friendship. The SEC is the best place to work because of you.”
Modernizing Asset Management Regulatory Framework
Ms. Blass and Investment Management oversee an industry that continues to grow and innovate at a rapid rate. In 1940, when the key statute regulating the asset management industry was signed into law, the registered fund industry consisted of 105 funds with $1 billion in assets. The Division now regulates more than 14,000 registered funds that hold a combined nearly $27 trillion in assets, as well as more than 13,800 registered advisers with nearly $97 trillion in regulatory assets under management.
As an example of its work to modernize the current framework, Investment Management, under Ms. Blass’s leadership, recommended new rules to the Commission for:
- Exchange-Traded Funds: a consistent, standardized framework for the regulation of the vast majority of ETFs operating today. In addition, the Division recommended that the Commission authorize the first new actively managed ETF models since 2008 that did not publish their portfolio holdings daily.
- Fund of Funds Arrangements: an updated, consistent and comprehensive regulatory framework for fund of funds arrangements with the necessary flexibility for fund managers to allocate and structure investments efficiently, without the costs and delays of seeking individualized exemptive orders.
- Business Development Companies: reforms to modernize the registration, offering and investor communications processes for BDCs and closed-end funds.
- Derivatives: enhanced the regulatory framework for use of derivatives by registered investment companies and BDCs. The new rule provides a modernized, comprehensive approach to the regulation of funds’ derivatives use that addresses investor protection concerns and reflects market developments.
- Fund Fair Valuation Practices: a new rule designed to clarify how fund boards of directors can satisfy their obligations in light of market developments. This Commission last addressed valuation practices over 50 years ago.
- Investment Adviser Marketing: reforms to modernize rules governing adviser advertisements and payments to solicitors. The amendments created a single rule designed to comprehensively and efficiently regulate adviser marketing activities.
As Investment Management worked to modernize the regulatory framework for the asset management industry, it reviewed prior staff statements to consider changes in light of market or other developments. Through this initiative, the staff withdrew outdated letters that addressed advisers’ responsibilities in voting client proxies and retaining proxy firms, and that addressed the intersection between state control share acquisition statutes and the investment company Act’s voting requirements for closed-end funds. The Division also withdrew or recommended the withdrawal of dozens of prior staff statements as the Commission adopted or amended rules to ensure consistent treatment. Further, the Division revisited and revised the historical “Dear CFO” letters, providing updated guidance in light of market developments in fund auditing and accounting practices.
Ms. Blass also led the division in issuing guidance regarding proxy voting responsibilities of investment advisers, including guidance for circumstances where additional information from issuers may become available, investment advisers’ use of a proxy advisory firm’s electronic vote management system and disclosure and client consent obligations when investment advisers use these services for voting.
Improving the Main Street Investor Experience
Understanding that Main Street investors increasingly rely on mutual funds, ETFs and other investment vehicles to meet their financial goals, Ms. Blass and the Investment Management team undertook a significant effort to improve the overall experience for investors. The touchstone of this initiative is the basic principle of effective disclosure – disclosure should help investors make informed investment decisions by providing information in a clear, digestible and well-designed format. The cornerstone of the initiative was modernizing the content, design and delivery of fund regulatory materials. Actions taken by the Commission and the Division as part of this initiative include (1) a new disclosure framework for variable annuity and variable life insurance contracts, which permits the use of concise and reader-friendly summary prospectuses and leverages both technology and layered disclosure to improve the investor’s ability to understand and evaluate the features, fees and risks of these specialized products; and (2) the proposed comprehensive reforms to the disclosure framework for mutual funds and ETFs that would comprehensively update and modernize the design and content of shareholder reports and make uses of advances in technology and design techniques, including by encouraging funds’ use of interactive design features and tools to enable investors to customize information.
As part of this initiative the Division designed an innovative “feedback flyer” to make the agency’s policy discussions accessible to Main Street investors. Through this form, Main Street investors submitted comments on many Division recommendations including on the Form CRS, the variable annuity summary prospectuses, and investment adviser marketing. In addition, Main Street investors used this form in response to the Request for Comment on Fund Retail Investor Experience and Disclosure, which led to the Division’s recommendation on reforms to the disclosure framework for mutual funds, and ETFs.
Elevating Standards of Conduct for Financial Professionals
Ms. Blass led teams from across the Commission, including from Investment Management and Trading and Markets, on the Standards of Conduct rulemaking package. This rulemaking package was designed enhance the quality and transparency of the financial professional-retail relationship and included two overarching objectives: (1) to bring the legal requirements and related mandated disclosures of financial professionals (both broker-dealers and investment advisers) in line with reasonable investor expectations; and (2) to preserve retail investor access (in terms of choice and cost) to a variety of investment services and products. It included Regulation Best Interest, Form CRS Relationship Summary, the Interpretation Regarding the Standard of Conduct for Investment Advisers, and the Interpretation Regarding the Solely Incidental Prong of the Broker-Dealer Exclusion from the Definition of Investment Advisers. Together, these initiatives are intended to help retail investors find and use important information and empower them when choosing a financial professional or product. Since the adoption of the Standards of Conduct rulemaking package, Ms. Blass and her team have been actively engaged in the implementation of the rules through the Commission’s inter-Divisional Standards of Conduct Implementation Committee.
Navigating the COVID-19 Pandemic
As the global pandemic took hold, Ms. Blass led efforts to protect investors and ensure market integrity as the asset management industry coped with the new challenges. The staff engaged with registrants about the issues they faced adjusting to the pandemic and what regulatory response may be needed, made hundreds of calls across the industry to gain direct insight into ongoing and potential issues, and analyzed data received from registered funds and advisers. These efforts enabled to staff to better inform the Division’s and the Commission’s assessment of how various market segments are functioning and any potential, regulatory response. This work and insight allowed the Division to contribute to more than 20 COVID-related temporary rules, exemptive orders, staff no-action letters and other staff statements including temporary relief addressing filing and delivery challenges, providing additional tools for obtaining credit and permitting fund boards to meet virtually. Ms. Blass also is a member of the SEC’s internal COVID-19 Market Monitoring Group and contributed to the Staff’s report on the U.S. Credit Markets Interconnectedness and the Effects of the COVID-19 Economic Shock.
Board Outreach Initiative
Under her leadership, the Division launched the board outreach initiative to comprehensively review and reevaluate board responsibilities. Through this initiative, Ms. Blass and the outreach team met with dozens of fund directors and collected insights that informed many initiatives including the new rules on exchange-traded funds and fund fair valuation practices, as well as a staff no-action letter on board oversight of affiliated transactions.
Improving Regulatory Oversight
With over 200 dedicated professional staff tasked with overseeing a growing and complex asset management industry, Ms. Blass took several measures to improve Investment Management’s ability to oversee the industry. This included: (1) the formation of the specialized industry unit which houses the Division’s exchange-traded fund, money market fund, ERISA, operations and private fund portfolio specialists; (2) the recommendation for modernizing the process for the review of exemptive applications, including streamlined reviews of routine applications; (3) the reorganization and expansion the division’s legal and policy support to the Division of Examinations; and (4) the formation of the Asset Management Advisory Committee to provide the division and the Commission on how to make the asset management regulatory framework more effective and efficient.
Ms. Blass returned to the SEC as Director of the Division of Investment Management in September 2017 from private practice, where she advised on a broad range of investment fund, private equity, and regulatory matters. She previously served in a number of leadership roles in the Division of Investment Management for over a total of more than 14 years at the SEC. Ms. Blass is the recipient of the Distinguished Service Award and the Manuel F. Cohen Award. Ms. Blass was also named in Barron’s inaugural list of the 100 Most Influential Women in U.S. Finance. Earlier in her career, Ms. Blass practiced corporate law in New York and London.
Ms. Blass earned a J.D. from Columbia University School of Law. She received her B.A in international studies from the American University and studied political science at the American University in Cairo.
Upon Ms. Blass’s departure, Sarah ten Siethoff will become the acting Director of the Division of Investment Management.
The financial technology sector continues to evolve at a rapid pace, offering innovations that disrupt traditional paradigms. Today’s briefing underscores fintech’s diverse growth avenues: from substantial venture capital plays and strategic partnerships to groundbreaking implementations in lending. Here’s a closer look at recent developments shaping the landscape.
Synapse’s Comeback and Andreessen Horowitz’s Strategic Bet
Source: Axios
Synapse, a financial infrastructure company previously embattled by controversy, is staging a remarkable comeback, backed by none other than venture capital heavyweight Andreessen Horowitz (a16z). With this new infusion of funds, Synapse aims to consolidate its position as a premier platform for building financial services tools.
This resurgence demonstrates the resilience of the fintech ecosystem, where innovation often prevails over turbulence. Synapse’s renewed vigor also signals that top-tier investors remain bullish on infrastructural solutions pivotal to the future of digital finance. Andreessen Horowitz’s participation not only validates Synapse’s model but also underscores the VC giant’s enduring interest in fintech infrastructure, even amid global economic uncertainties.
Analysis:
This partnership exemplifies the dynamism within fintech, highlighting the interplay of innovation, capital, and resilience. It also raises questions about the broader implications of giving second chances to firms with turbulent histories. While Synapse’s evolution could inspire others, it also places a spotlight on governance and accountability in high-growth sectors.
Israel’s Fintech Scene Gets a Boost with Investment in Finova Capital
Source: Calcalistech
Israeli fintech startup Finova Capital has raised an impressive $20 million in a funding round led by prominent institutional investors. This marks a significant milestone for the company as it seeks to expand its suite of financial solutions aimed at underserved markets.
Israel’s fintech ecosystem has long been recognized as a hub of innovation, and this latest investment only reinforces its global standing. Finova Capital’s focus on empowering smaller businesses and fostering financial inclusivity aligns with emerging trends where tech-driven solutions bridge critical gaps in financial services.
Analysis:
With this funding, Finova is poised to enhance its technological offerings while contributing to economic inclusion. However, the broader fintech industry will watch closely to see how the company leverages this capital amid increasing competition from regional and global players.
India’s Yubi Plans a Fundraising Push
Source: Bloomberg
Yubi, a prominent Indian fintech platform backed by Insight Partners, is reportedly preparing for a new fundraising round. Having already established itself as a leader in credit infrastructure, Yubi aims to bolster its offerings and expand its market footprint.
India’s fintech landscape is witnessing explosive growth, with platforms like Yubi playing a critical role in the credit ecosystem. Yubi’s planned fundraising reflects the broader appetite for scaling solutions that streamline credit access, particularly in emerging markets where traditional lending models often fall short.
Analysis:
This development highlights two key trends: the increasing reliance on credit platforms in high-growth economies and the strategic role of international investors like Insight Partners in driving fintech innovation. Yubi’s expansion plans could set a precedent for other regional fintech players seeking to scale amid global economic headwinds.
Provenir and Hastings Financial Services Win Global Recognition
Source: Business Wire
In a testament to the transformative power of digital lending solutions, Provenir and Hastings Financial Services have been jointly recognized for the Best Digital Lending Implementation at the IBSi Global Fintech Innovation Awards. This accolade underscores the success of their collaboration in modernizing the lending process through cutting-edge technology.
Provenir’s advanced decision-making platform and Hastings Financial Services’ lending expertise have delivered a solution that significantly enhances user experience, operational efficiency, and risk management. Such innovations highlight the increasing role of partnerships in advancing fintech’s digital transformation.
Analysis:
This recognition not only validates the efficacy of digital lending but also emphasizes the importance of partnerships in driving innovation. It signals to the industry that collaboration can be a powerful tool for staying ahead in a rapidly evolving marketplace.
Microf and Quantum Financial Technologies Forge New Alliances
Source: PR Newswire
Microf, a financial solutions provider, has announced a strategic partnership with Quantum Financial Technologies. This collaboration aims to expand lending solutions for contractors, providing streamlined access to capital for businesses in need of flexible financing options.
This partnership is a timely response to the growing demand for specialized financial products in niche markets. By leveraging Quantum’s technology, Microf can now offer more tailored solutions, particularly to contractors navigating complex financial requirements.
Analysis:
This development reflects a growing trend: the diversification of fintech offerings to serve specific market segments. As competition in mainstream fintech intensifies, targeting underserved niches could become a defining strategy for success.
Key Takeaways for the Fintech Ecosystem
- Resilience in Fintech Funding: Despite economic uncertainties, venture capital continues to fuel innovative fintech players like Synapse and Finova Capital.
- Regional Growth Stories: From Israel to India, fintech ecosystems are thriving, attracting global attention and investment.
- Collaboration as a Catalyst: The success of partnerships like Provenir-Hastings and Microf-Quantum underscores the importance of strategic alliances.
- The Power of Recognition: Awards like the IBSi Fintech Innovation Awards validate industry achievements, inspiring others to push the envelope.
- Focus on Inclusion: Whether through credit platforms or lending solutions, fintech is playing a pivotal role in fostering financial inclusivity worldwide.
Looking Ahead: Challenges and Opportunities
The fintech sector’s journey is far from linear. Regulatory complexities, technological disruptions, and market volatility remain persistent challenges. However, as seen in today’s developments, the opportunities far outweigh the risks. By prioritizing innovation, collaboration, and inclusivity, fintech players can navigate the complexities of the global financial landscape.
This moment in fintech history is pivotal. It’s a time for bold decisions, strategic partnerships, and a commitment to bridging financial divides. As industry players rise to the occasion, the road ahead promises a future where technology and finance intertwine to empower individuals and businesses alike.
The post Fintech Pulse: A Daily Dive into Industry Innovations and Developments appeared first on News, Events, Advertising Options.
Fintech
Fintech Latvia Association Releases Fintech Pulse 2024: A Guide to Latvia’s Growing Fintech Hub
The Fintech Latvia Association has launched the latest edition of its annual publication, Fintech Pulse 2024, unveiling insights and resources that position Latvia as a thriving hub for European fintech.
Announced at this year’s Fintech Forum, the magazine is now available in digital format, offering a comprehensive guide for fintech professionals and entrepreneurs navigating the Latvian market and exploring its advantages.
This issue covers essential topics, from support tools provided by Latvijas Banka and newcomer roadmaps to Riga’s investor resources and fintech education opportunities. Readers will find the latest fintech news from Latvia, coverage of this year’s key industry events, and member insights on the future of fintech. The Fintech Landscape section provides a comprehensive overview of the Latvian fintech ecosystem.
Tina Lūse, Managing Director of Fintech Latvia Association, expressed excitement about the ecosystem’s growth: “We are excited to unveil the third annual edition of Fintech Pulse. This year has been pivotal for our ecosystem, and together with public sector stakeholders, we are enhancing financial inclusion, democratizing investments, and driving innovation throughout the sector. This is a testament to Latvia’s emergence as a fintech hub, establishing itself as an equal partner in innovation and support within the Baltic region.”
Minister of Finance Arvils Ašeradens highlighted Latvia’s fintech potential in the magazine, stating: “Latvia has already made strides in adapting its regulatory framework to support a stable financial system. Now, we encourage financial market players to invest in modern technologies to meet the growing demand for inclusive financial services and solidify Latvia’s position in the fintech landscape. We are confident that with the combined offer of the government, Latvijas Banka and Riga city, we are a great place to start your next scalable European FinTech!”
Minister of Economics Viktors Valainis expressed Latvia’s ambition in the magazine, stating: “Latvia wants to become a WEB 3.0. innovation hub and solidify itself as one of the leaders of a newly regulated EU crypto-asset market. We welcome international companies to choose Latvia, a flexible and fast-paced country, where you can obtain a MICA license in just 3 months. Open your office in Latvia, receive a MICA license and serve the whole EU market!”
The Fintech Latvia Association brings together fintech and non-banking financial service providers to represent their interests at both the national and international levels. It promotes sustainable development in Latvia’s financial sector by fostering reliable, responsible, and long-term industry practices that earn trust from consumers and regulatory authorities. The association is committed to supporting innovation and growth opportunities within the fintech landscape.
The post Fintech Latvia Association Releases Fintech Pulse 2024: A Guide to Latvia’s Growing Fintech Hub appeared first on News, Events, Advertising Options.
The World Economic Forum (WEF) has released a pivotal white paper in collaboration with the Financial Conduct Authority (FCA), titled “Quantum Security for the Financial Sector: Informing Global Regulatory Approaches”. This January 2024 publication underscores the urgent need for global cooperation as the financial sector transitions from a digital economy to a quantum economy, highlighting both the immense opportunities and cybersecurity challenges posed by quantum computing.
Quantum: A Double-Edged Sword for Finance
Quantum computing offers transformative benefits for the financial sector, such as accelerated portfolio optimization, enhanced fraud detection, and improved risk management. Yet, it simultaneously threatens the very foundation of cybersecurity. With quantum’s ability to break traditional encryption methods, sensitive data and financial transactions face significant risks. The white paper warns that such vulnerabilities could erode trust in the financial system and destabilize global markets.
The urgency to prepare is evident, with some quantum threats, such as “Harvest Now, Decrypt Later” attacks, already emerging. Governments and regulators, including the United States with its National Security Memorandum on Quantum (2022), have begun advocating for quantum security readiness by 2035. However, as noted in the paper, transitioning to a quantum-secure infrastructure is a monumental task requiring unprecedented coordination between regulators, industry leaders, and technology providers.
A Collaborative Framework: Four Guiding Principles
To address the complex challenges posed by quantum technologies, the WEF and FCA have proposed four guiding principles to inform global regulatory and industry approaches:
- Reuse and Repurpose: Leverage existing regulatory frameworks and tools to address quantum risks, rather than creating entirely new systems.
- Establish Non-Negotiables: Define baseline requirements for quantum security, ensuring consistency and interoperability across organizations and jurisdictions.
- Increase Transparency: Foster open communication between regulators and industry players to share best practices, strategies, and knowledge.
- Avoid Fragmentation: Prioritize global collaboration to harmonize regulatory efforts and avoid inconsistencies that could burden multinational organizations.
These principles aim to create a unified, forward-looking strategy that balances innovation with security.
A Four-Phase Roadmap for Quantum Security
The white paper introduces a phased roadmap to help the financial sector transition toward quantum security:
- Prepare: Raise awareness of quantum risks, assess cryptographic infrastructure, and build internal capabilities.
- Clarify: Formalize engagement between stakeholders, map current regulations, and model the cost and complexities of transitioning to quantum-safe systems.
- Guide: Address regulatory gaps, translate technical standards into actionable frameworks, and develop industry-wide best practices.
- Transition and Monitor: Implement cryptographic management modernization and adopt iterative, adaptable regulatory approaches to remain resilient in the quantum economy.
This roadmap emphasizes adaptability, encouraging stakeholders to continuously refine their strategies as quantum technologies evolve.
The Path Forward: Collaboration as a Catalyst
The transition to a quantum-secure financial sector is not merely a technological shift but a comprehensive rethinking of how industries and regulators approach cybersecurity. The interconnected nature of global finance means that collaboration between mature and emerging markets is crucial to avoid vulnerabilities that could undermine the entire system.
Regulators and financial institutions must act with urgency. As Sebastian Buckup, Head of Network and Partnerships at the World Economic Forum, notes in the report:
“The quantum economy era is fast approaching, and we need a global public-private approach to address the complexities it will introduce. We welcome this opportunity to collaborate with the FCA to chart the roadmap for a seamless and secure transition for the financial services sector.”
Similarly, Suman Ziaullah, Head of Technology, Resilience, and Cyber at the FCA, emphasizes:
“Quantum computing presents considerable opportunities but also threats. The financial sector relies heavily on encryption to protect sensitive information, the exposure of which could cause significant harm to consumers and markets. Addressing this requires a truly collaborative effort to transition to a quantum-secure future.”
Global Impact: Ensuring Resilience in an Evolving Landscape
As quantum technologies mature, they will redefine the landscape of cybersecurity. The financial sector, as one of the most sensitive and interconnected industries, must prioritize preparedness to ensure stability, protect consumers, and maintain trust.
The Quantum Security for the Financial Sector: Informing Global Regulatory Approaches white paper offers an essential foundation for continued dialogue and action. By adhering to the guiding principles and roadmap outlined in the report, stakeholders can navigate this transformation with foresight and cooperation.
The full report, published by the World Economic Forum, highlights the need for a unified global approach to quantum security, serving as a rallying call for industry and regulatory leaders alike.
Source: World Economic Forum, “Quantum Security for the Financial Sector: Informing Global Regulatory Approaches”, January 2024.
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