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Financial Supervisors and Regtech: Four Roles and Four Challenges

Revue Trimestrielle de Droit Financier, Forthcoming

9 Pages Posted: 28 Jan 2018  

Luca Enriques

University of Oxford Faculty of Law; European Corporate Governance Institute (ECGI)

Date Written: December 13, 2017

Abstract

RegTech, as the use of IT in compliance and supervision/regulation is now labeled, is a game-changer, given the revolutionary nature of current IT developments, such as data scraping tools, big data analysis techniques, and artificial intelligence or machine learning algorithms, which together allow for the aggregation and effective use of amounts of information that flesh-and-blood compliance officers and supervisors could never muster and master. In this short essay, I first scratch the surface of the “RegTech” label to identify four different uses of technology related to financial regulation, namely Operations RegTech, ComplianceTech, OversightTech, and PolicymakingTech. I next describe the four roles financial regulators can play with respect to RegTech: they can act as a developers/users (and sellers) of RegTech products; as buyers/users of products developed by others; as facilitators and coordinators of market developments; or as supervisors of RegTech firms. Finally, I set out the four main challenges financial regulators face in a FinTech/RegTech-dominated world, specifically with regard to their human resources, their internal governance, their cybersecurity risk, and their core operations goals of preventing, catching and punishing misbehaviour.

Keywords: Compliance, Cybersecurity, Financial Supervision, RegTech, FinTech, Securities Regulator, Supervisory Authorities

JEL Classification: G28, G38, K22, K23

Suggested Citation

Enriques, Luca, Financial Supervisors and Regtech: Four Roles and Four Challenges (December 13, 2017). Revue Trimestrielle de Droit Financier, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3087292

Luca Enriques (Contact Author)

University of Oxford Faculty of Law ( email )

St Cross Building
St Cross Road
Oxford, OX1 3UL
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http:/www.ecgi.org

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