UK’s regulator, the Financial Conduct Authority (FCA), intends to leverage blockchain technology to enhance its regulatory reporting.
According to the FCA, the blockchain-based digital regulatory reporting initiative seeks to lower costs in compliance checks. The initiative is being undertaken in partnership with the bank of England.
FCA head Nikhil Rathi notes that the current regulatory reporting is estimated to cost between £1.5 billion to £4 billion annually for the 20,000 rules across 58,000 firms.
“That’s why we’re working with the Bank of England on the Digital Regulatory Reporting Initiative. By connecting to firms through blockchain and API technology and implementing machine-readable and executable regulation, compliance checks can be completed in near real-time,” said Rathi while addressing the annual Mansion Houe gathering in London.
In recent months, the FCA has been accelerating its regulatory mandate on the financial sector. In July, the agency opened an office in Leeds and recruited 100 staff ranging from data scientists to data analysts.
Furthermore, the FCA has set aside £120 million to ensure it tackles abuses of the laid down regulations. The money will primarily be channeled towards data trolling capabilities.
The agency will also be leveraging the blockchain technology to oversee businesses considered more data-heavy, noting that as demand for data increases, firms may be able to use, market, or restrict data in ways that create poor user outcomes.
Furthermore, Rathi’s sentiments come after the FCA published its business plan for the 2021/2022 financial year. Under the plan, the agency hinted at a more aggressive and assertive approach to firms’ misconduct.
The FCA noted that it seeks to establish a more robust authorization gateway, especially for new firms, as part of enhancing stronger oversight and deploy innovative, data-driven approaches to prevent and stop misconduct.
The regulator is also focusing on close monitoring of whether firms are properly implementing set out operational resilience requirements.