ASIC embraces regtech, conducts natural language processing trials

Maria Nikolova

The Australian regulator believes what it is doing now marks the starting point of an evolving approach to regtech.

The Australian Securities and Investments Commission (ASIC) is diving deeper into the realm of new technologies, In a speech delivered today, ASIC Commissioner John Price said the regulator was conducting regtech trials, in particular, natural language processing trials.

In February this year ASIC released a set of problem statements with use cases to understand and encourage the application of natural language processing (NLP) in resolving regulatory problems. The trials aim to explore potential efficiencies in supervision, including through automation and prediction. These experiments offer “a genuine learning opportunity for ASIC”, Mr Price said.

A tender was issued for the provision of pilots in the areas of:

  • the advertisement and promotion of financial and credit services;
  • phone sales of insurance; 
  • managed fund PDS review;
  • financial advice file review;
  • financial reporting review of company announcements, and
  • prospectus review.

Mr Price said ASIC received approximately 30 applications and that the regulator was in the process of meeting with a number of those solution providers.

“Our intention is to land on a set of trials in the coming few weeks and conduct them this year”, he said.

Although regtech is not something that ASIC regulates directly, it is something the regulator is keenly interested in. Especially given that regtech is already a core element of risk and compliance frameworks for some parts of the Australian financial system, such as the monitoring of financial markets activity. The range of application of regtech is rapidly evolving, and is now extending to a variety of areas to assist businesses in meeting their regulatory obligations.

In March 2015, ASIC launched an Innovation Hub to help fintech businesses navigate the regulatory system without compromising investor and financial consumer trust and confidence. The Innovation Hub helps fintech businesses by providing access to senior staff at ASIC to streamline licensing processes and offering informal guidance to help bridge any knowledge and resourcing gaps.

In mid-2016, ASIC expanded the scope of the Hub to include engagement with the regtech sector. This work has included hosting and attending regtech events, including the Regtech Roundtable and Showcase events, as well as the new Regtech Liaison Forum. Since announcing its interest in regtech, ASIC has had over 60 meetings with regtech stakeholders and service providers to discuss their developments.

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