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September 10, 2018 at 05:24 PM
While the use of regtech offers potential benefits to aid broker-dealers’ compliance efforts, regulatory challenges may also accompany adoption of such tools, according to a just-released white paper from the Financial Industry Regulatory Authority.
FINRA’s paper summarizes key findings from FINRA staff discussions with more than 40 participants in the regtech space, including broker-dealers, vendors, regtech associations, academics and other key players.
The paper provides a rundown of how regtech tools are being applied in five areas: Surveillance and monitoring; customer identification and anti-money laundering (AML) compliance; regulatory intelligence; reporting and risk management; and investor risk assessment.
Also noted are “key benefits and potential regulatory and implementation implications” for broker-dealers to consider as they explore and adopt regtech tools.
A recent FINRA podcast also noted the emergence of suptech, or supervisory technology, which Haime Workie of FINRA’s Office of Emerging Regulatory Issues noted is a “new buzzword” that refers to “technology that’s used by regulators in the process of supervision, and potentially could be used to refer to firms themselves that use it as a supervisory type of function.”
Suptech is “really the use of technology to assist with supervision of rules and making sure there is compliance with those rules,” Workie said.
As FINRA’s report points out, regtech refer to “new and innovative technologies designed to facilitate market participants’ ability to meet their regulatory compliance obligations.”
The Institute of International Finance defines regtech as “the use of new technologies to solve regulatory and compliance burdens more effectively and efficiently.”
