In Juniper Research’s new Regtech report, the market size in 2023 is $83bn, while the forecasted market size in 2028 is $207bn. As a result, 124% market growth can be predicted. Amidst the development of public-private partnerships (PPPs) between regulators and private companies, one of the emerging trends in RegTech.
Private firms collect, analyze, report, or supervise data under a PPP, resulting in benefits for regulators, including access to advanced technologies, expertise, and data, improved efficiency and scalability, and enhanced market intelligence and oversight. Through PPPs, private firms can lower compliance costs and burdens, increase transparency and certainty, and gain competitive advantages.
Regulators, however, face some challenges and risks associated with PPPs, including how to ensure accountability, quality, and reliability of services provided by private firms, protect sensitive information and data from unauthorized access or misuse, manage conflicts of interest or bias, and maintain public trust. As a result of PPPs, some legal and ethical questions arise, such as who owns the data and IP rights, and who has jurisdiction to regulate RegTech activities.
Some existing or proposed PPPs in RegTech are:
The UK Financial Conduct Authority’s (FCA) Digital Regulatory Reporting (DRR) initiative, which aims to enable regulated firms to automatically submit regulatory data using a common data standard and a machine-readable rulebook;
The US Commodity Futures Trading Commission’s (CFTC) Project KISS, which seeks to simplify and streamline the CFTC’s rules by soliciting feedback from market participants on how to improve regulatory processes;
The European Commission’s (EC) European Blockchain Partnership, which involves 30 countries working together to establish a European Blockchain Services Infrastructure (EBSI) that will support cross-border public services using blockchain technology;
The Global Financial Innovation Network (GFIN), which is a network of 60 financial regulators and international organizations that aims to facilitate cross-border testing of innovative financial products or services.
RegTech PPPs offer regulators significant opportunities to leverage new technologies to improve performance and outcomes. To ensure that PPPs serve the public interest and uphold good regulation, they also require careful planning, management, and oversight. PPPs in RegTech should be developed with a proactive, collaborative, and adaptive approach by regulators, while also considering the risks.
