Hanfa’s international conference on the digitalization of capital markets held in Dubrovnik
On 1 and 2 September, Dubrovnik hosted the international conference “Capital Markets in the Digital Age: Balancing Innovation & Oversight” organised by the Croatian Financial Services Supervisory Agency (Hanfa). The event brought together around 100 representatives of regulators and industry from all over Europe, who discussed the changes and challenges brought about by digitalization in capital markets.
Ante Žigman, President of the Hanfa Board, welcomed the attendees and commented on the occasion of this international gathering, pointing out that technology is changing both the markets we control and the way we control them. He stressed the importance of simplifying and harmonising regulation while preserving stability and confidence in capital markets. He made clear that the aim is not deregulation, but smarter regulation that encourages innovation and strengthens the competitiveness of European markets. Highlighting the challenges, he mentioned the use of new technologies, including artificial intelligence. “Artificial intelligence is now a significant factor in trading, portfolio management and risk analysis, bringing efficiency but also new forms of vulnerability,” Žigman summarized.
Matej Bule, Chief Advisor to the Minister of Finance, recalled the recent signing of the Memorandum of Understanding on cooperation aimed at the development of capital markets between Croatia and seven countries of Central and Eastern Europe and explained the importance of this initiative. It is well known that the EU lags behind the US capital market, lagging even further behind the developed markets of Germany and France when it comes to the area covering Central and Eastern Europe. This initiative follows the idea of integrating the entire European market and focuses on greater market integration, increased retail investor participation and regulatory harmonisation, to be spurred on by this regional integration.
Natasha Cazenave, Executive Director of the European Securities and Markets Authority (ESMA), expressed her gratitude to Hanfa for hosting this insightful event, and for the opportunity to engage in forward-looking discussions on the future of Capital Markets in the Digital Age. She pointed out that ESMA remains committed to fostering dialogue on key market developments, such as tokenisation, while upholding the integrity, transparency, and resilience of European financial ecosystem. “We will continue to work closely with national competent authorities to deepen our understanding of these innovations and assess their potential benefits as well as their implications and risk for financial stability, investor protection, and market integrity,” she said.
As part of the introduction to the first discussion, Carmine di Noia, Director for Financial and Enterprise Affairs at the OECD, highlighted three topics which should be in the focus of financial market regulators in relation to artificial intelligence. These are: the potential impact of digitalization on financial stability, the impact on market competition due to digitalization, and consumer protection given the retail investors' relatively weaker understanding when it comes to the risks of investing in digital assets.
The first discussion titled “Regulatory Burden Simplification and Reduction” focused on the key challenges and opportunities to improve the regulatory framework. The panelists expressed their own views, highlighting dilemmas such as the excessive complexity of the rules and the need for greater clarity in regulation. The question also arose as to the causes of complexity – whether it was the impact of EU legislation, technical rules or national adjustments. In the end, the focus was placed on solutions and continuous work with a balance between financial stability and flexibility.
The second day of the conference saw a panel discussion titled “Supervision in the Age of Artificial Intelligence”, focusing on how financial markets and their supervision are being changed by artificial intelligence. The panelists addressed the opportunities and risks that AI brings, from preventing market manipulation to managing systemic risks, as well as whether the existing regulatory framework is appropriate to new challenges. The panel also explored the possibilities of using AI in supervision, the need for international cooperation and the balance between innovation, consumer protection and market stability.
The final panel, “Tokenization of Traditional Assets”, which was moderated by Deputy President of the Hanfa Board Anamarija Staničić, addressed the fact that tokenization is no longer just a pilot project, but instead it is something that industry and regulators are actually faced with and it raises questions of actual implementation – from integration into market infrastructure to cross-border rules, but also a conflict with some existing rules. The participants also looked at the situation and regulatory environment in Europe, but also in America and the rest of the world, and expressed their expectations regarding the future development of tokenization in the EU.
These two days presented an opportunity to discuss at European level the topics and challenges that digitalization in the world of finance and capital markets brings to market regulators, with a focus on striking a balance between innovation on the one hand and regulation and maintaining the stability and security of the financial market on the other.
