How Data Standards Will Modernize Our Government’s Regulatory Regime

Regulatory technology solutions, or “RegTech,” will enable automated regulatory reporting, derive insights from regulatory information, and share information on complex markets and products. Progress in RegTech has been seen in the private sector as access to quality data improves. This progress has not been mirrored in the private sector here in the United States, but the potential to improve government efficiency is not far off. Our RegTech Data Summit will be a unique opportunity to dive into the policy area and hear how RegTech solutions, empowered by the Legal Entity Identifier (LEI) and Standard Business Reporting (SBR), are transforming reporting and compliance relationships.

RegTech solutions have been defined by The Institute of International Finance as “the use of new technologies to solve regulatory and compliance requirements more effectively and efficiently.” PwC defines it as “the innovative technologies that are addressing regulatory challenges in the financial services world,” and notes that the financial environment is “ripe for disruption by emerging RegTechs” due to the growth of automation and rising compliance costs. As such, RegTech relies on the quality of its inputs – data.

Currently, regulatory information that is collected from regulated industries continues to be of poor quality and inconsistent. For example, the Securities and Exchange Commission has failed to police the quality and consistency of the corporate financial data it collects – which has made it much more difficult for RegTech companies to use that data to deliver insights to investors. The lack of consistent and quality data impedes the development of RegTech solutions in the United States.

Other developed countries are showing that once their regulators collect standardized data, their RegTech industries can deliver new value. For instance, Australian software vendors used the standardized data structure to build new compliance solutions. Using these solutions, Australian companies can now comply with at least five different regulatory reporting regimes within one software environment. In 2014-15 fiscal year, SBR was saving Australian companies over $1 billion per year through automation.

Our inaugural RegTech Data Summit on Wednesday, March 7, will explore how data standards, like SBR, can be adopted across our regulatory reporting regimes to enable RegTech to evolve into a thriving, sustainable industry and policy initiatives, such as the Financial Transparency Act (H.R. 1530), currently pending in the House of Representatives – directs the eight financial regulators to collect and publish the information they collect from financial entities in an open data form, electronically searchable, downloadable in bulk, and without license restrictions.

The Summit will be a unique opportunity to connect with agency leaders, Congressional allies, regulated industries, and tech companies who are defining this emerging policy area.

Attendees will have the opportunity to hear from leaders in the government and private sector. Headline speakers include: SEC Commissioner Piwowar; Joe Lonsdale, Founder of Palantir and OpenGov, Partner, 8vc; Giancarlo Pellizzari, Head of Banking Supervision Data Division, European Central Bank; and Stephan Wolf, CEO, Global LEI Foundation.

Summit-goers will see first-hand how RegTech solutions can modernize compliance across all regulatory regimes. Three simultaneous demos will take place: a Regulation demo, a Technology demo, and a Data demo.

On the Regulation demo stage you will see the legal drafting tool LegisPro, which automates the drafting and amending process of regulations and legal materials to be displayed and redlined (like Microsoft track changes). Once regulations are natively drafted as data, instead of just as documents, regulated industries will be able to digest them, and comply with them, much faster.

In the Technology demo, with Auditchain, you will see the company’s continuous audit and real time reporting ecosystem for enterprise and token statistics disclosure.  The continuous audit technology provides the highest levels of audit assurance through decentralized consensus based audit procedure under the DCARPE™ Protocol. The blockchain technology is revolutionizing how enterprises report to stakeholders and regulators.

Last, but not least, the Data demo session will explore how non-proprietary identifiers, such as the LEI, will make regulatory information accessible to the public, open, and available for anyone to bulk download. Dozens of agencies around the world, including the U.S. Commodity Futures Trading Commission and the Consumer Financial Protection Bureau, now use the LEI to identify regulated companies.

All in all, Summit attendees will hear from over 25 RegTech experts who are moving the chains in this new tech space, both domestically and internationally.

The Summit will explore four key themes:

1. Why RegTech solutions require data standardization.
2. How regulatory agencies can maximize the promise of such solutions by coordinating changes in Regulations, Technology, and Data.
3. Why old-fashioned document-based disclosures impedes higher quality data.
4. Explore how, in the long-term, regulatory agencies can create an entirely new paradigm for RegTech by embracing exiting regimes like Standard Business Reporting (SBR).

If you’re a data enthusiast or eager to learn how RegTech solutions can solve the challenges facing our financial regulators or regulated entities, join us March 7 at the Capital Hilton to learn how policy initiatives like the Financial Transparency Act and SBR will deliver changes, create a new RegTech industry, and generate new opportunities to apply emerging technologies like blockchain.

This article contains excerpts from Donnelley Financial Solutions’ upcoming white paper, How Data will Determine the Future of RegTech.