The Changing Nature of ‘Regulation by Information’: Towards Real-time Regulation?

European Law Journal (Forthcoming)

University of Luxembourg Law Research Paper No. 2023-05

28 Pages Posted: 26 Jun 2023 Last revised: 10 Jul 2023

See all articles by Herwig C.H. Hofmann

Herwig C.H. Hofmann

Universite du Luxembourg - Faculty of Law, Economics and Finance

Dirk A. Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance; European Banking Institute

Felix Pflücke

Universite du Luxembourg - Faculty of Law, Economics and Finance; University of Oxford - Faculty of Law

Date Written: June 22, 2023

Abstract

The concept of ‘Regulation by Information’ is changing. Past such approaches consisted mainly of signalling regulatory intent and indirectly guiding how and when regulatory discretion should be exercised. We suggest that this conceptual understanding must be reviewed in view of developing regulatory technologies (RegTech) allowing for a far more pro-active integration of data flows into regulatory processes. RegTech is thereby changing conditions of Regulation by Information.

This article uses financial regulation as an information-intensive and highly-regulated policy field to illustrate and analyse RegTech-induced changes to conditions of Regulation by Information. It finds that the rise of near real-time information flows between market participants and regulatory bodies, and, consequently, the need for near real-time regulatory responses on the European Union level have led to an ever higher degree of integration of regulatory software into market data flows.

Regulatory software now increasingly shapes the definitions of reporting standards and formats, which in turn shape regulatory choices by influencing information flows. The article shows how this development will likely be used in other data- and information-dense policy areas outside of financial markets.

Critics of Regulation by Information argue that it can lead to a lack of accountability and transparency, increasing the democratic deficit within the European Union. This article scrutinises both continuities and changes in the role and significance of legal principles and procedures used in regulatory oversight, following the evolution of this new form of Regulation by Information within the EU.

Keywords: RegTech, Real-time Regulation, Digital Governance, EU Administrative Law, Financial Regulation

JEL Classification: O20, O10, O19, O38, K29, I18, I30, G38

Suggested Citation

Hofmann, Herwig C.H. and Zetzsche, Dirk Andreas and Pflücke, Felix, The Changing Nature of ‘Regulation by Information’: Towards Real-time Regulation? (June 22, 2023). European Law Journal (Forthcoming), University of Luxembourg Law Research Paper No. 2023-05, Available at SSRN: https://ssrn.com/abstract=4488391

Herwig C.H. Hofmann

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

4 rue Alphonse Weicker
Luxembourg, L-2721
Luxembourg

Dirk Andreas Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Luxembourg, L-1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/research_unit_in_law/equipe/dirk_andreas_zetzsche

European Banking Institute ( email )

Frankfurt
Germany

Felix Pflücke (Contact Author)

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Bâtiment Weicker (Bureau C221A), 4 rue A. Weicker
Luxembourg, L-2721
Luxembourg
003524666445244 (Phone)

University of Oxford - Faculty of Law ( email )

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

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