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STRATEGIC CONSIDERATIONS
4.3.1 CATALYSING REGTECH
Enabled by the rapid advancement of technology, RegTech have emerged in recent years as solutions for market participants to automate and enhance the effectiveness of their compliance to regulatory requirements, risk management monitoring and regulatory reporting. Examples of RegTech adoptions across various jurisdictions can be found in many literatures, some of which are outlined in the Box Article: Objectives of RegTech. RegTech solutions which enable real time detection could allow issues to be addressed before they manifest into larger concerns, and early detection of emerging risks can mitigate reputational loss and regulatory sanctions. Automated RegTech solutions which remove manual intervention can reduce costs of operations and regulatory compliance while solutions that identify and mitigate fraud risks, including innovative KYC solutions, can deliver better outcomes for consumers.
Across most of these examples, RegTech solutions demonstrate benefits that can enhance the capital market’s overall efficiency in mitigating material risks and maintaining market integrity. As the SC looks to promote greater self-regulation and discipline within the capital market, RegTech can play a role in enabling market participants to self-monitor compliance requirements and detect lapses in a timely manner. This includes moving beyond the traditional sampling approach to leveraging technology to audit complete sets of data and at more regular intervals.
Recognising the potential of RegTech, the SC aims to see greater use of data, analytics and technology by market participants to improve efficiency, maintain market integrity and protect investors. This means encouraging greater RegTech adoption among participants and facilitating growth in RegTech innovation. In doing so, the SC will adopt a three-pronged approach as outlined in Diagram 24.
Diagram 24
THE APPROACH FOR THE DEVELOPMENT OF REGTECH IN MALAYSIA
Expand RegTech Knowledge
Collaborate with ecosystem partners to conduct outreach programmes
Facilitate industry-wide dialogues on RegTech innovation
Catalyse RegTech Innovation
Enable a collaborative platform with other regulators, market participants as well as ecosystem players, including accelerators and RegTech innovators
Where necessary, provide regulatory guidance or clarification to facilitate the entry of RegTech solutions
Encourage RegTech Adoption
Develop understanding of market needs for RegTech and the barriers or challenges to the adoption of RegTech
Collaborate with market participants to implement pilots, particularly in emerging RegTech areas
Source: SC.
104 SECURITIES COMMISSION MALAYSIA