In Case Study, Wicked Problem

A view from, Richard Maton, Chief Marketing and Strategy Office, Sybenetix

“The framework being developed by the industry for MiFIDII data management and reporting provides the catalyst for innovative technologies such as AI and new collaborative models enabled through the Cloud to transform risk and compliance effectiveness for both firms and regulators.

For example, Sybenetix’s Behavioural Analytics Model applies algorithms to individual decision making to provide a holistic behavioural analysis of market abuse, conduct risk and investment performance. Supervised machine learning is used to eliminate false positives for market abuse surveillance, provide instant insight based on individual behavioural profiles, and an evidence-based conduct risk system for senior managers and accountable individuals.

Developed for firms and regulators, the Behavioural Analytics System is validated by a community of leading financial institutions and through the traditional processes and timetables of regulatory scrutiny. Sybenetix is currently working with partners to scale its Behavioural Analytics Model using cloud infrastructure being developed for the granular data  reporting required by MiFIDII. The company is also solving new regulatory challenges associated with the use of AI in financial services.

The Industry Sandbox could help accelerate Sybenetix’s development process through a faster, more  efficient digital collaboration framework that creates new standards for proactive conduct risk management while further reducing costs and risk for both firms and regulators.

Ultimately, the value proposition of the Sandbox for RegTech  firms, financial institutions and regulators is its capacity to accelerate off- market testing to on-market use and scaling. The key is designing the right process and testing mechanisms within the Sandbox that all stakeholders can align around to validate new RegTech  solutions. For example, defining a standardised set of KPIs for more  effective regulatory outcomes of new solutions that link directly to the application of core technologies and business models. This should include an assessment of how new solutions and models reduce operational risk compared with legacy systems and models. For example, how systems scale with the speed, breadth, accuracy and transparency required under  new regulations.

The application of this RegTech  acceleration framework could extend beyond  conduct risk to the broader set of risk and regulatory challenges that RegTech  solutions are solving. For example, the development of KYC/AML monitoring, regulation scanning, interpretation, change management, reporting and risk management solutions. Such a framework would enable faster validation of new systems for use by both participants and supervisors. This framework could also help facilitate new collaborative designs of more  effective and efficient regulation, such as real-time supervision, and even new models of self-regulation.

Consequently, the Sandbox could also enable regulators to accelerate how they become more  ‘digital’ through a collaborative framework that fits into broader, global policies and mechanisms being developed.  For example, integrating an Industry Sandbox with other testing mechanisms such as sprints and sandbox initiatives in other jurisdictions would also benefit Sybenetix, its partners and its global financial institution clients.”


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