37 Nw. J. Int'l L. & Bus. 371 (2016-2017)
FinTech, RegTech, and the Reconceptualization of Financial Regulation

handle is hein.journals/nwjilb37 and id is 383 raw text is: 




Copyright 2017 by Douglas Arner, Janos Barberis, and Ross P. Buckley  Printed  in the U.S.A.
Northwestern Journal of International Law & Business                         Vol. 37, No. 3






FinTech, RegTech, and the Reconceptualization of
Financial Regulation




Douglas W. Arner*, Janos Barberis** & Ross P. Buckley***


      Abstract: Regulatory  change and  technological developments  following the 2008
      Global Financial Crisis are changing the nature offinancial markets, services, and
      institutions. At the juncture of these phenomena   lies regulatory technology  or
      RegTech  -the use of technology, particularly information technology, in the context
      of regulatory monitoring, reporting, and compliance.

      Regulating rapidly transforming financial systems requires increasing the use of and
      reliance on  RegTech.  Whilst the principal regulatory  objectives (e.g., financial
      stability, prudential safety and soundness, consumer protection and market integrity,
      and  market competition and  development) remain,  their means of application are
      increasingly inadequate. RegTech developments are leading towards a paradigm shift
      necessitating the reconceptualization offinancial regulation.

      RegTech  to date has focused on the digitization of manual reporting and compliance
      processes. This offers tremendous cost savings to the financial services industry and
      regulators. However, the potential of RegTech is far greater - it has the potential to
      enable a  nearly real-time and proportionate regulatory regime that identifies and
      addresses risk while facilitating more efficient regulatory compliance.

      We  argue that the transformative nature of technology will only be captured by a new
      approach  at the nexus of data, digital identity, and regulation. This paper seeks to
      expose the inadequacy of digitizing analogue processes in a digital financial world,
      sets the foundation for a practical understanding of RegTech, and proposes sequenced
      reforms that could benefit regulators, industry, and entrepreneurs in the financial
      sector and other industries.





* Kerry Holdings Professor in Law, University of Hong Kong.
** Senior Research Fellow, Asian Institute of International Financial Law, Faculty of Law, University
of Hong Kong, and Founder, FinTech HK.
*** C[FR  King &  Wood  Mallesons Chair of International Financial Law, Scientia Professor, and
Member, Centre for Law, Markets & Regulation, UNSW Australia.
The authors gratefully acknowledge the financial support of the Hong Kong Research Grants Council
Theme-based Research Scheme (Enhancing Hong Kong's Future as a Leading International Financial
Centre) and the Australian Research Council Linkage Grant Scheme (Regulating a Revolution: A New
Regulatory Model for Digital Finance); the substantial input of Dr. Cheng-Yun Tsang, and the research
assistance of Jessica Chapman.


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