The World Federation of Exchanges warns the European Commission of discriminatory impact of EU Digital Operational Resilience Act

 

PRESS RELEASE

The World Federation of Exchanges warns the European Commission of discriminatory impact of EU Digital Operational Resilience Act

London, 19 December 2024 – The World Federation of Exchanges (WFE), the global trade association for exchanges and clearing houses, has published a letter to the European Commission on behalf of the Chief Risk and Chief Information Security Officers within its membership. The letter regards the interpretation of Information and Communication Technology (ICT) Service providers under EU’s Digital Operational Resilience Act (DORA), which governs ICT service providers for companies within the EU. 

Whilst the European Supervisory Authorities (ESAs) have made EU regulated services exempt from being classified as ICT services under DORA, they have indicated that the exemption will not extend to third country regulated financial services.

The WFE is urging the European Commission to address this discrepancy and adopt a consistent and coherent interpretation of the definition of ICT services under DORA to ensure an effective implementation.  

Without doing this, the Act could have substantial implications and create severe disruption for all types of EU market participants, including asset managers and dealers, receiving financial services from outside the EU. It would also increase the cost of business for EU market participants, reducing access by EU financial entities to non-EU markets, possibly leading to a loss of competitiveness for EU financial entities.

Nandini Sukumar, CEO of the World Federation of Exchanges commented, “We urge the European Commission to urgently clarify that the same distinction applies to non-EU regulated financial services. Any other outcome would undermine principles of international comity and deference to home country regulation, and recent history has shown that such standoffs are counterproductive. The Commission must take fast action to avoid disruption for consumers, increased costs, and to avoid reducing the competitiveness of the EU compared to other jurisdictions.”

The letter was sent by the WFE on behalf of our Enterprise Risk Working Group (ERWG) and represents the views of the Enterprise Risk Management (ERM) and Operational Risk Management (ORM) leadership we convene from the global financial exchanges and clearing houses within our membership. The Working Group develops industry consensus on ERM/ORM issues to support regulatory responses, stakeholder advocacy, and thought leadership. The ERWG fosters best practices, codes of conduct, and guidelines, while promoting information sharing, education, and benchmarking among members. It works to align global risk management standards and strategies to address common challenges and collaborates closely with the WFE’s Cybersecurity Working Group (GLEX), which pursues similar objectives from a cyber-risk perspective. 

Read the full letter here. 

For more information, please contact:

Cally Billimore

Manager, Communications

Email: [email protected]
Phone: +44 7391 204 007

About The WFE

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia-Pacific, 44% in EMEA and 19% in the Americas. WFE’s 87 member CCPs and clearing services collectively ensure that risk takers post some $1.3 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. WFE exchanges, together with other exchanges feeding into our database, are home to over 51,000 listed companies, and the market capitalisation of these entities is over $110 trillion; around $140 trillion (EOB) in trading annually passes through WFE members (at end 2024).

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back 49 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.

Website: www.world-exchanges.org

Twitter: @TheWFE

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