Click here to access the primer on Designing Optimal Regulation.
The use of technology and personal data in finance is changing the landscape of financial services. This is widening the choice set of financial services available to consumers, through two distinct trends that are enabled by the use of technology (i) the disintermediation of traditional financial services; and (ii) the convergence of processes, platforms and financial infrastructure. This use of data also gives providers the opportunity to personalise financial products and services suitable for different consumers.
As more consumers and financial service providers start transacting in this new environment, new considerations arise for the financial system and the existing regulations. The need arises to re-visit the regulatory posture assumed in a more analogue, less data-driven financial landscape on issues of micro-prudential risk, conduct regulation, consumer protection and systemic risk.
The robustness of existing frameworks for risk assessment, consumer protection, apportioning liability and the use of client data needs to be reassessed in this new landscape. Designing the optimal regulation for data-driven finance will require the creation of a new, shared understanding of risks that emerge in this changing financial landscape, calibrating appropriate regulatory responses and new methods of coordination across regulators within and outside the financial sector.
In this background, we have compiled a primer on designing optimal regulations. The primer looks at the current regulatory landscape in the realm of technology use and innovation in finance, the accompanying concerns that must be considered by regulators while designing optimal regulations for the future to come.
Click here to access the primer on Designing Optimal Regulation.
(This primer is created to support the discussions of the panel on designing optimal regulation at the 4th Dvara Research Conference on Regulating Data-driven Finance. The discussants for the panel include Mr Sopnendu Mohanty (Monetary Authority of Singapore), Dr KP Krishnan (MoSDE, Previously Additional Secretary, DEA, MoF), Dr Nachiket Mor and Ms Bindu Ananth (Dvara Research).
The primers for the conference are designed to give sufficient context to the discussions and provoke further conversation, rather than act as stand-alone research notes. The full agenda for the conference is available here. Read more about the research themes and motivations for the conference here. Following completion of the conference, proceedings and related documents will be available here.)
