Regulators are some of the main backers of the use of new financial technology
D. Grody, President Financial InterGroup Holdings Ltd
Trapped by still
functioning legacy systems and industry infrastructure
institutions, the legacy mindset embedded in financial
institutions may be providing the opportunity for Fintech
companies to sweep past them. Regulators are becoming
'industry’ has long informed regulators as to how
to improve markets by invoking the principle of 'best
practices’. At the same time regulators have gone
along with these best practices by accepting the principle of
an industry’s 'consensus’
approval. The two principles, best practices and
consensus approval has long been the way regulators obtained
input from the industry and made decisions as to what
regulations to implement. Incremental change was thought to be
the best way forward. Then the financial crisis came along and
regulators were forced to step out of their comfortable 'go
along with the industry’ mode. In fact the
industry, bounded in the past by sovereign regulation, was now
forced to consider itself as the unbounded 'global financial
industry’. This change was most apparent and
traumatic in the over-the-counter derivatives space where the
CFTC, the minor regulator in the US back then, led the charge
to regulate the previously unregulated industry, and to do it
at the global level.
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