Digital Innovation

Artificial Intelligence (AI) represents a potentially transformational technological development that can, through for instance automation of processes and enhanced decision-making, significantly change business and operating models in banks and capital markets. As AI adoption has progressed in capital markets, both financial regulators and other policy makers have provided guidance on application and management of AI or adopted legislation aimed to manage AI deployment, for instance the EU AI Act.

AFME works to enable members to reap business and operational opportunities offered by Artificial Intelligence through clear and reasonable regulatory and supervisory expectations, and by offering a platform for members to exchange on developments or challenges relevant for capital markets. 

Ensuring capital markets have robust cybersecurity and operational resilience has become an increasingly vital area of focus with the advent of new technologies. New regulatory regimes focused on operational risk management and resilience have been adopted in both the EU and UK in recent years, including the EU’s Digital Operational Resilience Act (DORA). Cyber regulations that apply to the economy as a whole rather than specifically to financial services are also becoming increasingly relevant.

AFME works to ensure cyber and operational resilience rules enable members to effectively and efficiently manage and mitigate cyber and operational risks. AFME also provides benchmarking services an organises member workshops and expert briefings to ensure members are informed about (managing) emerging risks. 

The volume and variety of data has proliferated in recent years and has become an increasingly important asset in capital markets, in particular given the rise of AI. This has focused attention on data quality, data management and data sharing.

AFME works with its members to work towards regulatory frameworks for data sharing that provide benefits for investors and for the efficiency of markets. 

Distributed Ledger Technology (DLT) enables distributed financial market infrastructure that can deliver programmable transactions and innovative and robust settlement. On top of DLT, new types of digital assets have been introduced that offer new opportunities for payments, investment and settlement.

AFME supports its members on building DLT-based capital markets in Europe by:

1. providing insights to issuers on how to navigate the possibilities and challenges of DLT-based market infrastructure;
2. advising policy makers on how regulatory frameworks can be updated to enable the development of DLT markets, and how key elements for the development of such markets – such as cash settlement on distributed ledgers – can be put in place.

AFME also works with members and policy makers to establish appropriate regulatory frameworks for digital assets.