The release of more data in formats that can be easily processed by third-party software, or “smart disclosure,” would boost the adoption of RegTech, the use of technology to help firms meet regulatory requirements.

Kirsten Thompson, Ana Badour, Matthew Flynn and Jason Phelan at law firm McCarthy Tétrault said in blog: “RegTech promises to make sense of cluttered and intertwined sets of data, rapidly configure and generate reports using this data, and intelligently mine the data to realize its value (i.e. use the same data for multiple purposes).”

They gave examples such as big data reporting tools for regulators and real-time compliance evaluation tools for surveillance, anti-money laundering and fraud which could allow the industry to comply with regulatory requirements more cost-effectively.

In the UK the Financial Conduct Authority issued a RegTech consultation in November 2015. The UK regulator said it received 100 written responses to the consultation from established financial services firms, technology suppliers and fintech start-ups, followed by an additional 250 responses at four roundtables in March this year hosted by techUK, Burges Salmon, JWG and Innovate Finance.

“The innovative and diverse ideas generated by the inputs and discussions at the roundtables ranged from the use of online portals and greater use of XBRL (see glossary) for reporting through to the use of more complex and wide-reaching technology, such as artificial intelligence, shared utilities and the blockchain,” added the FCA.

The lawyers at McCarthy Tétrault said the FCA noted that adoption of RegTech would be boosted by defining new regulations in a machine readable format, greater consistency and compatibility of regulations internationally and establishing a common global regulatory taxonomy.

“Similarly, the recent US Department of the Treasury’s white paper on marketplace lending “Opportunities and Challenges in Online Marketplace Lending” also recommended, more generally, the release of government data in formats that can be easily processed by third-party software, so-called “smart disclosure,” they added.

The FCA said a regulatory certification of RegTech that meets relevant criteria could build credibility. “This could increase the acceptance of, and therefore investment in, new regulatory tools. In turn, this could make guidance and standards easier to understand, reducing costs while improving compliance,” added the UK regulator.

The lawyers highlighted that RegTech could also assist with meeting global regulations such as Basel III, capital requirements and stress testing, as well as the Dodd-Frank Act in the US.

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