After more than a decade, DLT is gradually arriving in the financial industry. This time period does not come as a surprise: Other significant technological innovations such as computerised bookkeeping, decentralised systems (LINUX), cloud or digital KYC procedures have also taken some time until they were sophisticated enough to be used on a large scale in the financial industry.

There are two aspects of distributed ledger technology (DLT) that make its acceptance and distribution in the financial industry difficult: Firstly, DLT-based solutions tend to (at least partially) lever out the current market infrastructure and organisation, which leads to uncertainty in organisations or even to resistance of individual market participants. Secondly, the technology is difficult to understand and partially requires sound mathematical thinking skills. To the best of the author’s knowledge, there is no simple yet convincing explanation for the functioning of a blockchain, so there still remains a certain distrust of the technology among many people. Simultaneously, the lack of comprehension of DLT’s features repeatedly results in inadequate suggestions regarding its usage. The first decade in the life of DLT has not been free of problems either. There have been software errors, financial losses, conflicts within the community and legal problems. All of these issues show that DLT is not spared from the natural maturing process of a new technology either.

The new SDS white paper reflects the most discussed topics in the specialist area of financial institutions and in financial IT.

TRACE, the OECD Treaty Relief and Compliance Enhancement Package, is a withholding tax treaty claim mechanism for non-resident portfolio investors. Finland was the first country in the world to adopt it.

TRACE was established to simplify the approach of claiming lower tax rates by leveraging the central role of intermediaries. By registering as an Authorised Intermediary (AI), financial institutions and custodians may take over the responsibility for the correct taxation for their clients and agree to exchange the relevant information with the competent authorities, allowing the financial institutions and custodians to benefit from the opportunity to simplify their clients‘ cross-border investments.

The TRACE model for withholding taxes of dividends paid to nominee-registered shares was implemented at the beginning of this year and the first reporting is due in January 2022. For financial institutions and custodians registering as AIs or considering doing so, there is still much to learn about the TRACE benefits and challenges, about the details of the implementation in Finland, and prospective future jurisdictions adopting this regime.

This SDS WHITEPAPER summarizes the key findings of the discussion on the following points:

• The benefits of TRACE
• The specifics in Finland
• The challenges of implementation
• The future of TRACE

generated during an SDS webcast in May 2021.

In addition, we provide a summary of an expert interview with Veroskatt (Tax Authority Finland) in the form of an e-paper in the download-section.

The future of software testing is clearly moving towards automation. In this context, faster availability, changeability, and maintainability are the focus of an increasing number of agile projects. Particularly the advancing digitisation with its hunger for new features in shorter and shorter cycles presents testing with ever-growing challenges. A discussion panel with testing experts from the telecommunication and software industry from Germany and Austria. Find out more about AI in Software Testing in our SDS Whitepaper.

DOWNLOAD WHITEPAPER

MAD II/MAR – The EU Market Abuse Regulation has created a uniform legal framework and catalogue of criminal law for the prohibition of market manipulation and insider trading since 2016. Moreover, financial institutions have been obliged to take active and proactive measures in order to avoid these criminal offences in their own backyard. The amendments pose significant challenges for the financial industry, especially the banking sector, and their IT systems. Traditional methods for monitoring securities compliance are no longer effective here – therefore, new procedures have to be implemented. Almost three years later, it is time to take stock of the success of MAD/MAR and of the current market developments. The Austrian software vendor SDS (Software Daten Service) continuously sets digital standards in terms of advanced solutions for securities processing, regulatory issues and compliance for the international financial industry. SDS’ latest white paper on MAD/MAR compliance concisely summarises the most significant findings and experiences from three years of practical application and also provides approaches for the automated monitoring of securities and derivatives transactions.

Can the calculation, withholding and certification of taxes by the financial services sector represent a future-oriented scenario for a central software solution?

Since the first reports in the framework of the US American FATCA regime four years have already passed. In the meantime already two years of CRS reporting according to the provisions of the OECD are over. In between the British CDOT reporting was to be considered, which has already been replaced by the CRS for the time being. Time to draw a conclusion of the findings obtained and to take a look into the future.