Regulating Regtech: The Benefits of a Globalized Approach
1 Candidate au doctorat, Faculté de droit, Université de Montréal
Résumé
Regulatory technology, or RegTech, helps financial institutions around the world comply with a myriad of data-driven financial regulations. RegTech’s algorithms make thousands of decisions every day: they identify and block suspicious clients and transactions, monitor third party exposures, and maintain statutory capital thresholds. This article tackles one of the main problems of RegTech: the risks posed by inherently opaque algorithms that make the aforementioned decisions. It suggests that due to the fundamental importance of RegTech for the robustness of global finance, a globalized model of regulating RegTech’s algorithms should be adopted. This model should be based on two facets of regulation: first, the soft law harmonizing instruments implemented by transgovernmental networks of cooperation; and, second, the domestic administrative instruments that adapt global requirements to particular jurisdictions.
English
Regulatory technology, or RegTech, helps financial institutions around the world comply with a myriad of data-driven financial regulations. RegTech’s algorithms make thousands of decisions every day: they identify and block suspicious clients and transactions, monitor third party exposures, and maintain statutory capital thresholds. This article tackles one of the main problems of RegTech: the risks posed by inherently opaque algorithms that make the aforementioned decisions. It suggests that due to the fundamental importance of RegTech for the robustness of global finance, a globalized model of regulating RegTech’s algorithms should be adopted. This model should be based on two facets of regulation: first, the soft law harmonizing instruments implemented by transgovernmental networks of cooperation; and, second, the domestic administrative instruments that adapt global requirements to particular jurisdictions.