RegTech and You!

PolyU Capstone Lecture on Fintech and Big DataSchool of Accounting and FinancePolyu Business School.22 September 2017

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About the Speaker

Mr. C.K. CHO,

Barrister, LLB( Hons.) London, FHKIMoD

Professor of Practice( Law) School of Accounting and Finance

Hong Kong Polytechnic University

Former President of Association of Certified Fraud Examiners HK Chapter

Former Head of Legal Research and Management and Chief Investigator Operations Department, Independent Commission Against Corruption

Expert in Legal Compliance, Corporate Governance, Regulatory Framework and Fraud Risk Governance.

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Regulators

HKMA SFC MPF Insurance Authority

HKEX

Legal Framework

Law of Agent/Trust

Statutory Controls

Code of ConductEvidence & Procedures

Duties of Directors and

Officers of Company

Companies Ordinance

Securities & Futures

Ordinance

General Compliance

• Anti-money Laundering• Anti-bribery

• Personal Data Privacy1. Fiduciary

Duties2. Duty of care

and skills

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Financial Market

Securities Market

Regulatees Financial Intermediaries

SFC Licenced Corporations

Agents

Licensing by SFC

Fit + Proper Test

Professional Knowledge Test

Civil Liabilities

Criminal Liabilities

Regulation of Market

Intermediaries

I.P.O

Takeover/ M & ASecondary

Markets

Regulatees

SecuritiesDealers

Investment Advisers

Capital Market Representation

Corporate Finance

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Authorised Financial Institutions

(“Banks”)

Statement on initial coin offeringsSource: Securities and Futures Commission

5 Sep 2017http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=17PR117

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Chinese Regulators Ban Raising Funds via ICO Effective Immediately

Source: Avi Mizrahi | News (CryptoCurrency) | Monday, 04/09/2017|12:39 GMT

http://www.financemagnates.com/cryptocurrency/news/chinese-regulators-ban-raising-funds-via-ico-effective-immediately/6

Providing Financial Services with Innovative Technology

FinTech RegTech

Regulators RegulateesReal time control

Reducing compliance risks

Technical Services Providers

D.I.Y Solutions

Big Vendors

HP Intel Microsoft

RegTech covers 4 Areas

AML KYC

Anti-Fraud

Risk Management

Data Management Compliance

Source: Janos BaherisHKU LawFounder Supercharger and Fintech HICCo-Editor, the Fintech and RegTech BookTranscript of KeynoteGiven at FinnoAsia at 30 May 2016

Payments Insurance Market Infrastructure Digital Banking

Lending Investment Management

Equity Crowdfunding

Source: Beyond Fintech World Economic Forum – A Pragmatic Assessment of Descriptive Potential in Financial Services

Paperless Economy

Blockchain

a distributed ledger that maintains a robust and

immutable list of records chronologically across multiple systems in real-time, leaving a

historically audible trail that anyone can trace back from

day zero.

Traditional Banking

Remittances

IPO vs Crowd Funding

Regulators

•Securities and Futures Commission•HK Stock Exchange•Companies Registry•Gold Exchanges•HK Monetary Authority

Government

•Voting• How they will deliver their services• Postal Offices Registration of cars and ownership of properties, birth and death, Marriage

•

Black Economy Exposed? Underground Banking Destroyed?

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VS

Paperless Economy

Stored Value ApplicationsImpact on•Anti-money

laundering•Anti-Bribery•Tax Evasion•Personal Data

(Privacy)Ordinance

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Smart Contract

Artificial Intelligent Legal

Information Research Assistant

Traditional Legal

Services

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VS

Online Legal

Services Provider

Electronic Transactions Ordinance

Trust + Confidence

Cyber Security

Deep Web

Hacking

Government Hackers

CIA?

NSA Remember Snowden?

Private Hackers

Malicious

Ethical

IntegrityHow do we monitor the use of

personal data by the Big Brother? Bill of Rights?

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Reconceptualization of Financial Regulation

•FinTech•Reg Tech

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Source: FinTech, RegTech and the Reconceptualization of Financial Regulationby Douglas W. Arner, Jànos Barberis, Ross P. Buckley

Primary Regulatory Objectives•Financial Stability•Prudential safety and soundless•Consumer protection•Market integrity•Market competition and development

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Source: FinTech, RegTech and the Reconceptualization of Financial Regulationby Douglas W. Arner, Jànos Barberis, Ross P. Buckley

Reg Tech – the Challenges• ReactiveLaw Makers – Too Slow?Regulators – always lag behind new technology?Financial Services – Stakeholders Too much to lose?Vested interest? (Note: the case of Uber)

• ProactiveHong Kong Blockchain Society

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Figure -Bridge FinTech / RegTech start up analysis

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Source: RegTech is the New Fintech Deloitte

The Opportunities18

RegTechAs an

entrepreneurs

As a User ?

Blockchain

You?

BitcoinEthereum

As a Final Student Student

Impact on your career?

Your further studies

Where do we go from here?