RegTech Intelligence

Unblocking the ecosystem: building a healthy environment for RegTech

With JWG’s RegTech conference coming up on 5th July, we thought it wise to spell out a few of the most pressing issues up for discussion on the day.

Our first panel – Unblocking the ecosystem* – will provide a comprehensive review of the barriers to RegTech development and adoption.

On this topic, we have previously written that to truly foster effective development and adoption of RegTech, there needs to be a collaborative effort to harmonise regulatory agendas and work towards industry standards for innovative technologies. A much clearer interpretation of rules and guidelines will bring the clarity needed for investment and increased use. Indeed, there are signs that we are now at least heading in the right direction.

The building of a FinTech bridge between the UK and Singapore – following a similar agreement between ASIC and the FCA in March – has seen regulatory cooperation become the name of the game. Completing the triangle is Australia and Singapore’s yet-to-be-formulated agreement to ensure that each respective country’s regulation does not hinder the progress of FinTech companies operating across their borders.

With the European Securities and Markets Authority (ESMA) set to publish a discussion paper very soon on how blockchain will fundamentally change the industry (and more importantly, how regulators ought to react), it is clear that regulators are preparing for something big. There is also activity in the collaborative area, for example in the Federal Reserve’s FinTech working group with academics, vendors and institutions.

Despite this substantive movement, we are yet to witness a truly collaborative international effort to standardise the regulatory approach to emerging technologies. Granted, diverse agendas are likely to cover more areas where RegTech can potentially bring positive change; but as we have argued in our response to the UK Treasury’s consultation on support for innovation, divergent regulatory agendas risks losing focus on the standards required at the foundation of this new field.

Industry vendors are now flocking to provide their two cents in support of this issue, with chief executives calling for an open blockchain standard to be developed before interoperability issues prevail. “As the technology evolves, there won’t be one blockchain for everything. We will find – much like markets and exchanges and depositories (which are likewise regulated differently by jurisdiction) – that blockchain ecosystems will be created that must work together and live together, with assets that are moved across these ecosystems”, warned Justin Chapman, global head of process management at Northern Trust.

Calls for a blockchain query language echo the same resounding call – we cannot rush forwards into a financial services 2.0 landscape without setting a robust, interoperable benchmark to build it off.

Yet as we discussed, regulators concerned with overstepping their legal mandate are often fearful of authorising the use of new technologies, let alone setting the standards for use that they desperately need. An interview with Javier Sebastian, digital regulation expert at BBVA, at this week’s BBVA-hosted RegTech event saw him urge the regulators to be confident. RegTech possesses huge benefits for regulators, and in helping them address systemic risk through more granular data and better interaction with firms, it is far more likely to reduce financial risk than contribute to it.

The conference

At the conference on the 5th July, our first panel will address the key question “how do we work together to harmonise agendas, produce the standards and provide the clear case for RegTech development?”

We have cherry picked some of the industry’s brightest minds to provide their insight and discuss the issue, so far including Matthew Hampson (MD, Global Wholesale CTO, Nomura), Joanne Hannaford (Managing Director, Technology, Goldman Sachs), and Stephane Malrait (MD Global Head of Financial Markets eCommerce at ING).

Watch this space as we publish our thoughts leading up to each of the RegTech panels at our conference, accompanied by all the latest industry developments. We aim to prepare the ground for progressive dialogue, so RegTech can get the market reflective of its true potential.

*July conference panel:

09:35 Panel: Unblocking the ecosystem – what it takes to see the benefits

  • What are the barriers currently holding back RegTech development?
  • How can these barriers be lifted or overcome and who should lead this approach?
  • How can we foster a collaborative approach to this?

Click here to find out more about our industry-acclaimed MiFID Implementation Training session, which we are offering following the conference on the 6th July.

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