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April 04, 2018 at 04:30 PM
While fintech has become a widely recognized term for technology innovation in the financial services space, the industry is still trying to pin down the exact meaning of regtech.
SEC Commissioner Michael Piwowar took on what he called the “ill-defined” term in a recent speech, stating that in part, regtech “covers the use of technology by regulators to fulfill their duties in a more thorough and efficient manner,” as is the case when the Securities and Exchange Commission’s Market Abuse Unit Analysis and Detection Center “deploys technological tools to detect insider trading and market manipulation activities.”
However, regtech, Piwowar added, “also refers to the use of technology by regulated entities to streamline their compliance efforts and reduce legal and regulatory costs.”
One example would be using blockchain technology and artificial intelligence tools to “allow the easy and secure transferal of critical regulatory data to multiple federal agencies,” he said.
“Most importantly,” Piwowar added, regtech “covers collaboration between private and public actors to take advantage of existing technologies to make everyone’s lives easier.”
Another regtech example, Piwowar noted is the SEC’s “critically important” Electronic Data Gathering, Analysis and Retrieval system, or EDGAR, which makes public company filings “truly accessible to the whole internet-wired world,” and “greatly enhanced and democratized the power” of the SEC’s disclosure-based regulatory system.
As he noted, the Commission is currently engaged in an EDGAR redesign program, “a multiyear cross-Commission initiative to develop and deliver a ‘next-generation’ electronic disclosure system.”
A Post-Financial Crisis Remedy
Aite Group stated in a recent report titled Regtech Reality Check: The Truth About Compliance Technology that the new industry buzzword combines the terms “regulation” and “technology” and reflects the industry demand for technology to “better arm” the compliance function in the wake of the financial crisis of 2008.
