The Hong Kong securities regulator, the Securities and Futures Commission (SFC), will commence a pilot project next month to assess how ‘fintech’ can be used in its regulatory monitoring processes with a view to implementing new systems. A sample group of 20 banks will be participating in the pilot project along with an external technology firm.

Regulators across the globe are increasingly making use of fintech for data analysis purposes in a trend known as ‘regtech’. Reports indicate that the SFC is hoping to make use of fintech to support its existing processes for reviewing and analyzing data gained from the financial market with a view to improving its ability to identify unlawful conduct and risks such as fraud.

This project proposal reinforces the SFC’s support for fintech following its creation of the ‘Fintech Contact Point’ earlier this year. The Fintech Contact Point was established to “facilitate the Fintech community’s understanding of the current regulatory regime and to enable the SFC to stay abreast of the development in Hong Kong”.

This use of fintech by the SFC also falls in line with the objectives of promoting and facilitating the development of fintech in Hong Kong, which are two of the objectives identified in the Report of the Steering Group on Financial Technologies, which was commissioned to consider and advise how best to develop and promote Hong Kong as a hub for fintech.

This project proposal further mirrors activities of other regulators, such as the Financial Conduct Authority (FCA) – the UK regulatory body, which has also been taking steps to support and evaluate the development of regtech. The FCA recently published a review of comments it received from a ‘Call for Feedback’ which sought to gain the views of the financial market as to how they might bring together regulatory requirements with technology through regtech (Full report available at: https://www.fca.org.uk/publication/feedback/fs-16-04.pdf).

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