“Not discussing innovation for innovation’s sake”- ASIC’s view and key takeaways from the report
ASIC has shared its take on innovation in financial markets.
A meeting held by ASIC recently emphasised the importance of staying dynamic in the financial markets to keep up with competitiveness, innovation and growth opportunities.
According to the report prepared by the Digital Finance Cooperative Research Centre (DFCRC) for ASIC, financial markets are increasingly adopting automation, compressing settlement cycles and enabling extended hours in traditional markets.
In other words, in a technology-driven world, managing wealth has become much easier, but it also entails greater cybersecurity risks and regulatory demands.
What does this mean for wealth management firms?
The report from DFCRC highlights the rapid growth of financial markets driven by automation and technology.
- Wealth managers and platform providers need to process transactions and complete reporting very quickly.
Transactions are completed in a shorter time frame, implying that buying, selling, transferring, and processing funds occur quickly. The adoption of the latest technology also reshapes trading instruments, settlement processes, and the way investors access markets.
- Extended market hours demand high operational continuity and support
The fixed time frame for market operation is becoming blurred. Some exchanges have started providing pre- and after-market guidance through technological integration. The increased investment in digital assets like cryptocurrencies is enabled by 24/7 trading and advanced market infrastructure.
Operating beyond existing hours places an additional load on the operations team to support clients longer and process transactions faster, and increases pressure on safe infrastructure, compliance, and overall operations.
- With innovation, pressure to achieve efficiency alongside regulatory compliance increases
While AI adoption helps firms operate faster, they are constantly monitored and regulated by evolving regulatory requirements.
Every wealth/portfolio management firm or platform provider needs to ensure that their client data is safe, regulatory reporting is accurate and submitted on time, the adopted technology complies with financial regulations, and proper oversight mechanisms are in place.
- Confidentiality, regulatory compliance and client trust become the highest priority
Penalties, legal action, reputational damage or loss of business opportunities are the implications that any firm doesn’t want to incur.
For a wealth management firm or an infrastructure provider, investment details, portfolio numbers, and confidential information should be managed securely.
AI and automation continue to be topics of growing interest these days, but the value they deliver depends on how thoughtfully and selectively we use them. The ASIC’s meeting emphasises promoting dynamism in financial markets while maintaining resilient standards in the era of cutting-edge AI and rising data risks.
For wealth management firms and platform providers, managing regulatory pressures stemming from governance and control issues in AI deployment and implementing increasingly complex automated trading environments becomes more crucial.
With expectations increasing for these firms to be more innovative and competitive, strengthen compliance, and improve operational agility, a greater need for scalable operational support remains vital to scaling, growing, and transforming in today’s digital-first market conditions.
