Regtech and new derivatives developments

Jamila D Smoot Burrell and Charmaine Fearon

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