FCA warms up to use of AI solutions to enhance compliance

Maria Nikolova

The UK regulator examines how machines will be able to interpret and implement regulatory reporting rules.

The UK Financial Conduct Authority (FCA) is embracing regulatory technology (regtech) and various artificial intelligence (AI) solutions in order to enhance regulatory compliance.

Nick Cook, Head of Data and Information Operations at the FCA, has shed some light on the plans and steps taken by the UK regulator in this respect. According to a report by CNBC, featuring Mr Cook’s comments made at London Fintech Week on Tuesday, the regulator is examining feedback from regtech firms in order to inform itself about the adoption of automated, digitized compliance.

The FCA is looking at the possibility of making its Handbook machine-readable and then fully machine-executable. This means that machines can interpret and implement the rules directly.

The range of applications currently examined by the FCA include enhanced use of speech-to-text analytics tools within the FCA, as well as solutions that allow better use of social media analytics. The regulator would also utilize AI to detect financial irregularities, Mr Cook said.

The comments by Nick Cook are in line with the latest developments around FCA’s regulatory sandbox. The regulator had received 77 submissions for the second phase of the regulatory sandbox, which allows firms to test innovative products and services in a live environment while making sure that consumers are protected in the right manner. The accepted propositions from firms in the second cohort cover a range of ideas including distributed ledger technology based payment services and artificial intelligence software to observe client behaviour and to help determine client preferences before financial advice is provided. Blockchain solutions and AI technology clearly dominate the second cohort of projects.

The Bank of England is also welcoming AI and Blockchain solutions as shown by the third round of Proofs of Concept (POCs) completed by its FinTech Accelerator.

The Bank has collaborated with Mindbridge Ai, a machine learning and AI firm, to explore the analytical value of using AI tools to detect anomalies in supervisory data sets. This PoC allowed the Bank’s internal team of scientists to compare and contrast their own findings and the underlying algorithms being used, providing an additional layer to the Bank’s work.

An interesting development was seen in the Bank’s collaboration with Ripple in the area of distributed ledger technology (DLT). In this PoC, the Bank and Ripple studied how DLT could be used to model the synchronised movement of two different currencies across two different ledgers. This formed part of the Bank’s vaster research into the future of high-value payments.

The Bank has earlier concluded that DLT is “not sufficiently mature” to support the core RTGS system, but the test with Ripple has supported the Bank’s intention to ensure its new RTGS system is compatible with DLT usage in the private sector.

Read this next

Digital Assets

Crypto.com secures preliminary approval to operate in Canada

Crypto.com, one of the longest-established crypto platforms, has become the first digital asset platform to sign a Pre-‘Registration Undertaking’ with the Ontario Securities Commission (OSC) in Canada.

Retail FX

CySEC hits IC Markets One with regulatory warning

The Cyprus Securities and Exchange Commission has once again stepped up its fight against unauthorized brokers.


XTAGE now offers bitcoin and ether trading to 3.6M Brazilian investors

Brazilian financial services giant XP has officially launched its crypto trading platform XTAGE, which was built on major American stock exchange Nasdaq’s trading technology.

Institutional FX

FX volume drops 7pct at CLS Group in July 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in July.

Digital Assets

Web3 startup PIP integrates with Binance ecosystem

Web3 payment provider PIP has announced integration with the Binance ecosystem, which allows the firm to vastly develop and propose needed products and improvements that are worthy of competing with others chains.

Industry News

Celsius $750m insurance claims are fraud, says lawyer seeking EU crypto superfund

“It is an intentional deception in aid of a billion-dollar securities offering.”

Institutional FX

DGCX brokers authorized to provide derivatives trading and clearing services

The DFM is looking to provide multiple asset classes such as; equities, ETFs, equities’ futures, crude oil futures, etc. to meet the growing demand from its diversified base of local and international investors.

Digital Assets

EQONEX leaves “crowded crypto exchange space” amid crypto winter

“The recent extreme market volatility and declining trading volumes have added to the headwinds being felt by exchange operators. We take a realistic view that our exchange will not move the needle for us financially over the near-to-medium term.”

Digital Assets

FTX and Paradigm partner for spreads trading: lower risk, lower fees

“This structured spread trading product is the first that will enable crypto investors to utilize cash and carry trades through FTX and Paradigm.”