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Regulatory Oversight And Supervision Must Accompany Capital Market Growth

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Sanjay Pawar, Head of IT, India Advantage Securities,,

capital markets recognize and drive capital to the best ideas and enterprises. Capitalism is a catalyst for innovation, opportunity and dynamism. Coupled with the free flow of capital, innovation is an integral component for supporting job creation, economic development and prosperity.

Markets facilitate the transfer of funds from those who seek a return on their assets to those who need capital and credit to grow. Clients benefiting from healthy capital markets include not just investors but also corporations and governments. Capital, raised through equity and debt, can be used to grow businesses, finance investments in new plant, equipment and technology and fund infrastructure projects.

We are already seeing alliances between leading incumbent financial services and technology companies, using robotics and AI to address key pressure points, reduce costs, and mitigate risks. They are targeting a specific combination of capabilities such as social and emotional intelligence, natural language processing, logical reasoning, identification of patterns and self-supervised learning, physical sensors, mobility, navigation, and more. And they are looking far beyond replacing the bank teller.

Some of the common fintech opportunities financial institutions are analyzing, preparing to deploy or currently utilizing include:

Artificial Intelligence / Cloud Computing / Distributed Ledger Technology / Machine Learning /Machine Readable Rulebooks / Regulatory Technology / Enabling Technological Changes / Changing Regulatory Environment/Reducing Expenses / Mitigating Risk Microservices / Improving Firm Agility and Workflow

Capital markets firms use IT investments to update legacy systems, improve cybersecurity and the client experience and adopt new technologies.

Capital markets firms use it investments to update legacy systems, improve cybersecurity and the client experience and adopt new technologies

Many of these fintech disruptors are modeling entirely new conceptions of investing, trading, clearing, settlement, and custody in the search for a means to create a robust infrastructure.

Innovations including extensive use of big data, artificial intelligence (AI) and machine learning. Participants will seek to reduce cost and create competitive advantages.

Regulators will have to respond to these challenges. In their facilitation role, regulators have to be forward looking and identify potential areas for market development.

Two developments that are also likely to impact regulations are product suitability and data privacy.

Another challenge is cost pressures and innovation compelling market participants to maximize outsourcing arrangements. Regulators will have to deal with the attendant risks, especially of cross-border outsourcing.

Regulators have begun to use technology drivers and new products to reduce time for fund raising through public issues.

As the markets deepen and develop, regulatory oversight and supervision must develop alongside. Integrating risk and regulation at an enterprise level is a significant challenge and the success of the capital markets and its participants will depend on this.

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