Golden Copy: Invisible Rules

In last week's Empire Startups FinTech Conference here in New York, a remark by Stuart Lacey – the founder and CEO of Trunomi, the personal data sharing technology provider launched in October 2014 – during a discussion of regulatory compliance issues, struck a chord about how data privacy issues may continue to reverberate in the financial industry.

"I expected data privacy to come to the forefront, but not as quickly as it has," he said

Inside Reference Data has seen these issues building recently, as reported last month. In Europe, under MiFID II, traders are raising concerns about identification requirements, saying that these will adversely affect the security and privacy of their own personal data. The traders say that being required to add personal details to trade and transaction reports, which was not previously required, makes that data vulnerable to misuse if regulators or counterparties are hacked or that data is otherwise improperly accessed.

In addition, the traders say these disclosures are unnecessary and that adequate identification measures for transactions are already in place.

This particular aspect of MiFID II, coming from the European Commission and to be implemented by the European Securities and Markets Authority (ESMA), seems to have the exact opposite rationale as another new set of rules from these European bodies, the General Data Protection Regulation (GDPR).

This regulation sets strict safeguards on disclosure of personal data, requiring explicit permission for the use of such data. That puts the European Commission and ESMA at direct odds with what they're asking traders to disclose and submit, on the other hand, in the aforementioned part of MiFID II.

This contradiction raises a lot of questions. Will the European authorities actually address that, and make changes before MiFID II and GDPR take effect, or will it be left to the industry to figure out how to walk an invisible line?