Chinese Official Urges RegTech Investment

Lu Lei, Deputy Director of China’s State Administration of Foreign Exchange, has stressed the need for greater investment in regtech to support new market developments. “In the blockchain and the internet core high-frequency trading market, the past era of conducting regular off-site inspection and on-site inspection based on financial statements’ statistics implemented by the traditional financial institutions with single business are over,” he said at the 8th Asia-Pacific Forum on Economy and Finance. “This puts the urgency of real-time regulation on the agenda, and at the same time, implementing real-time regulation will also require payment systems and regtech to support.”

DLT to Help Regulators

Applications such as Distributed Ledger Technology (DLT) can help to effectively regulate the derivatives markets, according to Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo. He noted that DLT could be used to automate certain regulatory processes, which he described as “quantitative regulation.”

“We can… envision the day where rulebooks are digitized, compliance is increasingly automated or built into business operations through smart contracts, and regulatory reporting is satisfied through real-time DLT networks,” he said. “The machines here at the CFTC would have the ability to communicate regulatory requirements and consume and analyse the data that comes in through such systems.”

Calastone Shifts to Blockchain

London-based fintech firm Calastone, which provides back and middle-office services to over 1,700 clients including JP Morgan Asset Management and Schroders, has shifted its entire trading system to blockchain – including more than 9 million monthly e-communications. “The more you can automate, the more you de-risk, you more you streamline, the more you speed up,” said Andrew Tomlinson, chief marketing officer at Calastone.

Positive Progress, Says Powell

Progress has been made around the world on financial regulation, according to US Federal Reserve Chairman Jerome Powell. In a recent speech he noted that regulation has become stricter and more transparent, but warned that further adjustments could be on the horizon. “In the financial stability realm, the case for enhanced transparency is not just about being accountable; it is also about providing credible information,” he said. “[Stress tests] have placed special demands on transparency and accountability… The framework is still evolving, and we will need to be open to making changes.”

PwC Acquires KYC-Pro

PwC has acquired client onboarding specialist KYC-Pro from compliance consultancy FSCom for an undisclosed amount. The move comes as part of PwC’s plans to expand its regulatory compliance offering. KYC-Pro enables customers access to over 127 million companies worldwide, conduct individual AML checks across more than 20 countries and cross reference potential customers against international PEPs and Sanctions lists. PwC partner Ian McConnell says: “AI and automation can deliver significant benefits for organisations and people and, by incorporating KYC-Pro to our existing regulatory compliance offering, it complements the significant presence we already have in the financial crime operations space.” Research shows that by 2020, European banks will spend more than €1bn annually on their KYC management.

MünchenerHyp Selects Finastra for Regulatory Reporting

Münchener Hypothekenbank (MünchenerHyp), the property financing partner of German cooperative banks Volksbanken and Raiffeisenbanken, has selected Finastra’s regulatory reporting solution to meet its post-trade transaction and transparency reporting requirements under MiFID II and MiFIR. MünchenerHyp worked closely with Finastra and local implementation partner Finbridge to successfully deliver the project ahead of the MiFID go-live in January 2018. By integrating the solution with its front-office Fusion Post-Trade trading system, the bank has gained an end-to-end platform with the ability to support regulations such as EMIR and the Securities Financing Transactions Regulation (SFTR) in the future.

Synechron Builds APAC Focus

New York-based IT and digital consulting firm Synechron has launched a new financial innovations lab in Singapore. The new facility will help strengthen the firm’s offering in the APAC region and partner with its clients on interactive workshops related to key digital strategies such as AI, Blockchain, Data Analytics and RegTech. Synechron also recently partnered with Singapore Polytechnic to co-develop a curriculum for blockchain courses in order to enable further innovation in the region. The new focus on Asia follows the September 2018 appointment of a new APAC head, Mihir Shah, who joined Synechron in November 2017 after 11 years with UBS.

Fintech Investment Tops $30bn, Says KPMG

Investment activity in the FinTech segment topped $30bnin Q2 of 2018, exceeding Q1’s $25bn, as M&A activity sees a boost from private equity interest. The 2018 edition of KPMG’s ‘Fintech Pulse’ found that 2018 funding to date has already exceeded the total amount of fintech funding seen in 2017 and is well on pace to exceed 2015’s peak. Venture capital investment in the RegTech segment is on a strong trajectory, with 26 deals in H1 (compared to 54 for FY17). In terms of value, capital invested in RegTech during the first half of 2018 has already surpassed all of 2017. Should it keep up this pace for the remainder of 2018, it will set a record for the segment.

According to Fabiano Gobbo, Global Leader of Financial Risk Management KPMG International: “The regulatory landscape has evolved significantly in recent years, with the introduction of GDPR, PSD2 and MiFIDII/MIFIR creating more opportunity for risk, regulatory and compliance gaps to emerge. As a result, we are seeing financial institutions increasingly turning to RegTech to fill compliance gaps, save on the costs of compliance, get ahead of requirements before deadlines and detect enterprise risk before the regulators. This has led to an explosion in investment in RegTech firms over the past couple of quarters.”

Singapore Affirms RegTech Commitment

At the launch of the Singapore Fintech Festival (November 12-14), Managing Director of the Monetary Authority of Singapore Ravi Menon confirmed the country’s commitment to supporting regtech development. Menon identified six core pillars to develop the fintech ecosystem, many of which had a regtech focus – including identity/KYC, data governance and platforms for innovation. The Festival focuses on nine key themes, one of which is ‘TechRisk and RegTech’. It includes a Global Investor Summit showcasing next-generation ASEAN startups as well as an Artificial Intelligence Summit and an Innovation Lab Crawl.

Motive Partners Announces LPA Acquisition

Specialist fintech investor Motive Partners has announced the acquisition of a controlling interest in Lucht Probst Associates (LPA), a German software provider founded in 1999 which focuses on regulatory compliance for capital markets and wealth management, as well as providing strategic advice and implementation services. Motive will support LPA in accelerating the company’s growth, including product development, international expansion, and strategic hiring.