Regtech and new derivatives developments

Jamila D Smoot Burrell and Charmaine Fearon

Contents

Foreword

Preface

Preface

Introduction: Suptech/regtech defined: Payments, sandboxes and beyond

1.

The uncertain prudential treatment of cryptoassets

2.

US regulatory certainty versus uncertainty for crypto and blockchain

3.

Bermuda: Suptech and regtech supporting the risk-based approach

4.

Suptech: A new era of supervisory philosophy

5.

Cloud computing in the financial sector: A global perspective

6.

DeFi protocol risks: The paradox of cryptofinance

7.

IT transformation in the Prudential Authority of South Africa: A case study

8.

Making the vision a reality: Perspectives from the Monetary Authority of Singapore

9.

Lessons from Hong Kong through the lens of the HKMA

10.

Technological change: Is it different this time?

11.

The ECB’s suptech innovation house: Paving the way for digital transformation of banking supervision

12.

China’s financing opening up and regulatory convergence with the world

13.

Disclosures and market discipline: The promise of regtech

14.

Regtech and new derivatives developments

15.

Fintech and regtech: Leading the evolution and regulation of alternative investments

16.

The role of artificial intelligence and big data in investment management

17.

The promise and challenges of machine learning in finance

18.

Data privacy and alternative data

19.

Digital ID and financial inclusion

20.

Strategic technology: Regulation and innovation of CBDCs

21.

Regulatory sandboxes: Innovation and financial inclusion

22.

Technology and sandbox development innovation in a transitional market: A case study

23.

Developing the regulatory ecosystem: The evolution of stablecoin

24.

Central bank digital currency, regtech and suptech

25.

Digital dollar: Cryptocurrency for everyday commerce

26.

CFTC regtech implications for virtual currency trading

27.

Fintech, regtech, suptech and central bank decision making

Innovation has gone hand in hand with the growth of modern derivatives and the financial markets – as has risk. David Shaw, the founder of D. E. Shaw & Co. and a pioneer in high-speed quantitative trading, stated: “There are considerable risks for anyone dealing in derivatives because of the ease and speed of the transaction and the difficulty in understanding all the variables” (Goodwin, 1995). That same year, the long-running, popular television news magazine, 60 Minutes, reported that: “Some say [these financial agreements] could bring down the entire global banking system” (Goodwin, 1995). Little did anyone know what was yet to come.

DERIVATIVES AND TECHNOLOGY

Explosive growth, innovation and crises spur regulation-focused technology

The modern history of derivatives is a story of explosive growth, but also of financial market crises that have given rise to enhanced oversight, monitoring and the development of technology focused on regulatory compliance.

In fact, technology has been a cornerstone in aiding the industry to keep up with client and regulatory demands. Throughout the last 30 to 40 years of intense growth and innovation in the global derivatives market, the

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