FinTech / RegTech
  • Can Technology Undermine Macroprudential Regulation? Evidence from Peer-to-Peer Credit in China

    Source: Haikun Zhu, Fabio Braggion, Alberto Manconi
    Date Submitted: 31 May 2018
    Views: 40
    Downloads: 2
    We study whether and to what extent peer-to-peer (P2P) credit helps circumvent loan-to-value (LTV) caps, a key macroprudential tool to contain household leverage. We exploit the tightening of mortgage LTV caps in a number of cities in China in 2013 as our testing ground, in a difference-in-differences setting, and we base our tests on a novel, hand-collected database covering all lending transactions at RenrenDai, a leading Chinese P2P credit platform. P2P loans increase at the cities affected by the LTV cap tightening relative to the control cities, consistent with borrowers tapping P2P credit to circumvent the regulation. The granularity of our data allows us to separate credit demand from credit supply effects, with a fixed effects strategy. Our results also indicate that P2P lenders do not adjust their pricing and screening to the influx of new borrowers after 2013, despite the fact that their loans ex post have higher delinquency and default rates. Symmetric effects are associated with a loosening of mortgage LTV caps in 2015. Our test provides empirical evidence on the capacity of P2P credit to undermine LTV caps. More broadly, our analysis informs the debate on the challenges posed by the interaction between FinTech and credit regulation.
  • AsianFA: Forecasting Stock Returns with Model Uncertainty and Parameter Instability

    Source: Hongwei Zhang, Qiang He, Ben Jacobsen, Fuwei Jiang
    Date Submitted: 02 Apr 2018
    Views: 58
    Downloads: 4
    Paper for presentation at the 30th Asian Finance Association Annual Meeting to be held at Hitotshubashi Hall, Tokyo, Japan from June 25 - 27, 2018
  • Artificial Intelligence, Machine Learning, and Deep Learning: A Primer

    Source: Larry Cao, CFA
    Date Submitted: 05 Mar 2018
    Views: 876
    Downloads: 0
    We are witnessing the beginning of the artificial intelligence (AI) era. So what do investment managers need to know about AI, deep learning, and machine learning? Larry Cao, CFA, weighs in.
  • How Data travel through the market?

    Source: Chie Mitsui
    Date Submitted: 23 Feb 2018
    Views: 1011
    Downloads: 37
    This is discussion for role and future of DATA from financial statement. 
    You may imagine that analysts read financial statements prepared by company, evaluate company’s value and compare with peer companies….BUT, in reality, financial statements are used in various ways. There are many quant analysts and passive investors using information as “data”, which is standardized in a database (DB), and they have become the majority of market participants globally. In such case, real time data distribution has important role on the impact on the stock price. Also, use of Artificial Intelligence (AI) in analysis and investment has become more common today. 
    First, financial statements have to be converted into “Data” and then the data can travel through the market. 
    We discussed how financial data are used, but from a different angle, and consider the role of future financial statements and accounting standards. 
  • Sex, drugs, and bitcoin: How much illegal activity is financed through cryptocurrencies?  

    Source: Sean Foley, Jonathan R. Karlsen, Talis J. Putnins
    Date Submitted: 02 Feb 2018
    Views: 193
    Downloads: 0
    Cryptocurrencies have grown rapidly in price, popularity, and mainstream adoption. The total market capitalization of bitcoin alone exceeds $250 billion as at January 2018, with a further $400 billion in over 1,000 other cryptocurrencies. Over 170 “cryptofunds” have emerged, attracting around $2.3 billion in assets under management. What was once a fringe asset is quickly maturing.
    The rapid growth in cryptocurrencies and the anonymity that they provide users has created considerable regulatory challenges, including the use of cryptocurrencies in illegal trade (drugs, hacks and thefts, illegal pornography, even murder-for-hire), potential to fund terrorism, launder money, and avoid capital controls. There is little doubt that by providing a digital and anonymous payment mechanism, cryptocurrencies have facilitated the growth of “darknet” marketplaces that trade illegal goods and services.
    In a recent research paper, we quantify the amount of illegal activity that involves the largest cryptocurrency, bitcoin. As a starting point, we exploit several recent seizures of bitcoin by law enforcement agencies to construct a sample of known illegal activity. We also identify the bitcoin addresses of major illegal darknet marketplaces. The public nature of the blockchain allows us to work backwards from the law enforcement agency bitcoin seizures and the darknet marketplaces through the network of transactions to identify those bitcoin users that were involved in buying and selling illegal goods and services online. We then apply two econometric methods to the sample of known illegal activity to estimate the full scale of illegal activity.
    We find that illegal activity accounts for a substantial proportion of the users and trading activity in bitcoin. For example, approximately one-quarter of all users (25%) and close to one-half of bitcoin transactions (44%) are associated with illegal activity. The estimated 24 million bitcoin market participants that use bitcoin primarily for illegal purposes (as at April 2017) annually conduct around 36 million transactions, with a value of around $72 billion, and collectively hold around $8 billion worth of bitcoin.
    To give these numbers some context, the total market for illegal drugs in the US and Europe is estimated to be around $100 billion and €24 billion annually. Such comparisons provide a sense that the scale of the illegal activity involving bitcoin is not only meaningful as a proportion of bitcoin activity, but also in absolute dollar terms. The scale of illegal activity suggests that cryptocurrencies are transforming the way black markets operate by enabling “black market e-commerce”. In effect, cryptocurrencies are transforming the black market much like PayPal and other online payment mechanisms revolutionized the retail industry through online shopping.
    In recent years (since 2015), the proportion of bitcoin activity associated with illegal trade has declined. There are two reasons for this trend. The first is an increase in mainstream and speculative interest in bitcoin (growth in the number of legal users), causing the proportion of illegal bitcoin activity to decline, despite the fact that the absolute amount of such activity has continued to increase. The second factor is the emergence of alternative cryptocurrencies that are better at concealing a user’s activity (e.g., Dash, Monero, and ZCash). Despite these factors and numerous darknet marketplace seizures by law enforcement agencies, the amount of illegal activity involving bitcoin remains close to its all-time high.
    In shedding light on the dark side of cryptocurrencies, we hope this research will reduce some of the regulatory uncertainty about the negative consequences of cryptocurrencies. Hopefully, more informed policy decisions that assess the costs and benefits will contribute to these technologies reaching their potential. Our paper also helps understand the intrinsic value of bitcoin, highlighting that a significant component of its value as a payment system comes from its use in illegal trade. This has ethical implications for bitcoin as an investment. Third, the techniques developed in this paper can be used in cryptocurrency surveillance in a number of ways, including monitoring trends in illegal activity, its response to regulatory interventions, how its characteristics change through time, and identifying key bitcoin users, such as “hubs” in the illegal trade network.
    For more information, download the paper at
  • CE - AI / Machine Learning Using in Financial Industry

    Source: Jack Chao, Peter Lin
    Date Submitted: 10 May 2018
    Views: 57
    Downloads: 0
    CE Event - AI / Machine Learning Using in Financial Industry (CFA Society Taiwan/12JAN2018)
    Jack Chao (Founder and President of BravoAI Co. Ltd.)
    Peter Lin (Managing Director of Gamma Paradigm Capital)
  • #FHFinTech2018 report: "FinTech in 2018: The Fads, the Fears and the Future"

    Source: Claudia Bate
    Date Submitted: 20 Jan 2018
    Views: 2337
    Downloads: 198
    FleishmanHillard is pleased to launch our 2018 FinTech trends report – FinTech in 2018: The Fads, the Fears and the Future – featuring insight from some of the world’s most influential people in the banking, finance and FinTech community. Thirty experts from brands including Ant Financial, Citi, Ripple, Santander, Western Union, Starling Bank and Visa share their insights on the biggest opportunities for 2018 and lift the lid on their biggest fears for the year ahead.
  • CROWDFUNDING MALAYSIA'S SHARING ECONOMY - Alternative Financing for Micro, Small and Medium Enterprises

    Source: Dr Raymond Madden, Chief Executive Officer, Asian Institute of Finance, Kee Gek Choo, General Manager, Strategy, Policy Development and Research, Asian Institute of Finance
    Date Submitted: 27 Nov 2017
    Views: 4201
    Downloads: 85

    Although a relatively new phenomenon in Malaysia, crowdfunding has been greeted by the government and market alike as a part of disruptive financial technologies (FinTech) that add impetus to Malaysia’s move towards a 21st century digital economy. With the government’s policy commitment, financial assistance, regulatory supervision and other supportive measures, crowdfunding is expected to accelerate in the near future as a critical source of alternative financing for SMEs to create new employment, enhance social participation and help Malaysia adjust to the fast-shifting dynamics of the global economic and social landscape. In spite of its promising prospects, there are gaps in awareness of what crowdfunding is and the opportunities and risks it presents. There is a shortage of actionable information on: • the role of crowdfunding in the policy, business and financing environment for SMEs; • the level of understanding of crowdfunding among the public and small entrepreneurs; • their interest and willingness to participate in crowdfunded projects/activities; and • the effectiveness of the national ecosystem for crowdfunding. This report addresses these gaps to help realise the full potential of crowdfunding in Malaysia. It is based on a two-phase research study. The first consisted of a quantitative survey of the public and small entrepreneurs within the Klang Valley, and the second involved desk research and consultations with crowdfunding platform operators, national agencies/institutions, sophisticated investors and start-up entrepreneurs. The report describes a vibrant crowdfunding environment emerging in Malaysia following Bank Negara Malaysia’s policy support for alternative financing, and the Securities Commission Malaysia’s introduction of regulatory frameworks for equity crowdfunding (ECF) in 2015 and peer-to-peer crowdfunding (P2P) in 2016. Since crowdfunding continues to evolve rapidly around the world and is still at an early stage in the country, the insights offered by this report are an initial but comprehensive snapshot of the local crowdfunding environment and its future growth potential.
  • Can India get to 25 billion retail digital transactions in 2017–18?

    Source: Mahadevan Balakrishnan
    Date Submitted: 27 Nov 2017
    Views: 156
    Downloads: 0
    The government of India has set a target of 25 billion retail digital transactions for the year 2017–18 and is pushing all agencies to work towards this goal.

    This is an ambitious goal when one considers that India had only 9.6 billion retail digital transactions in the year 2016–17.

    Balakrishnan's paper examines the last 10 years of payment system data to establish trends and identify when India is likely to reach this target of 25 billion retail digital transactions. It also examines where India stands on the Rogers diffusion innovation curve with regard to the adoption of digital payments.

    Although India’s digital payments are growing, historical data and trend line projections suggest that the government of India’s target of 25 billion retail digital transactions in 2017–18 is unlikely to be reached.

    It is, however, conceivable that this might happen by 2019–20. With India still at the early adoption stage in digital payments and yet to reach a tipping point in terms of digital payments adoption, it will take a mighty effort to meet the ambitious target this (or indeed next) year.

    Government, regulators and other stakeholders can, however, adopt specific strategies such as appropriate pricing, reducing taxation, allowing white-label POS operators, supporting innovation and creating a level playing  field,  widening access, tapping the billions of transaction opportunities, standardising message formats and strengthening consumer protection to improve the digital payment infrastructure and speed up adoption to achieve the target of 25 billion transactions before 2019–20.

    While this paper focuses on India, the strategies are applicable to any developing country interested in strengthening digital payments.

    The full paper can be read at
  • Machine Learning – A Simple Example for Stock Market Prediction

    Source: HC SHU, Jaccob Thomas
    Date Submitted: 16 Nov 2017
    Views: 223
    Downloads: 13
  • 人工智能风口下的量化投资

    Source: 任瞳,兴业证券研究所,总经理助理、首席定量分析师、定量研究团队负责人
    Date Submitted: 01 Nov 2017
    Views: 280
    Downloads: 8
            随后,任瞳先生重点介绍了其团队针对雪球网在大数据方面进行的研究。根据雪球网的用户大概有三种行为:讨论(用户的发帖行为)、 交易(用户的关注行为)、 调仓(投资组合调整行为) ,总共构建了三个选股因子,分别是关注度因子、价值变动因子和负面情绪因子。其团队根据这三个因子分别构建了一些投资策略(见PPT),证实因子还是非常有效的,包括负面情绪因子如果跟反转因子如果结合起来的话,效应会更强。
  • AAM-CAMRI-CFA Institute Prize- Profit Sharing: A Contracting Solution to Harness the Wisdom of the Crowd    

    Source: Jiasun Li
    Date Submitted: 29 Aug 2017
    Views: 943
    Downloads: 0
    Paper Submission for AAM-CAMRI-CFA Institute Prize in Asset Management
  • AAM-CAMRI-CFA Institute Prize - The Case of T-Mobile USA, Inc. & AT&T (2010-2014): Financial Stability, Corporate Governance and Failed Business Processes

    Source: Michael C. I. Nwogugu
    Date Submitted: 29 Aug 2017
    Views: 132
    Downloads: 0
    Paper Submission for AAM-CAMRI-CFA Institute Prize in Asset Management
  • AAM-CAMRI-CFA Institute Prize - The Case Of Apple, Inc., and Fintech: Managerial Psychology, Corporate Governance and Business Processes

    Source: Michael Nwogugu
    Date Submitted: 29 Aug 2017
    Views: 204
    Downloads: 0
    Paper Submission for AAM-CAMRI-CFA Institute Prize in Asset Management
  • Asian Link

    Source: Dr Raymond Madden, FRSA, Neil Smith
    Date Submitted: 20 Aug 2017
    Views: 563
    Downloads: 0
    "Ethical issues in the financial services industry affect everyone, as almost all of society are consumers of its products and services.  Given the vital role that financial institutions play, moral hazards may be more acute and it is therefore unsurprising that the industry should be subject to the highest ethical standards.  Ethical dimensions create an environment based on trust and make economic transactions more predictable for producers and consumers".
  • FinTech and RegTech in a Nutshell, and the Future in a Sandbox

    Source: Douglas W. Arner, Janos Barberis, Ross P. Buckley
    Date Submitted: 02 Aug 2017
    Views: 4941
    Downloads: 129
    The 2008 global financial crisis represented a pivotal moment that separated prior phases of the development of financial technology (FinTech) and regulatory technology (RegTech) from the current paradigm. Today, FinTech has entered a phase of rapid development marked by the proliferation of startups and other new entrants, such as IT and ecommerce firms that have fragmented the financial services market. This new era presents fresh challenges for regulators and highlights why the evolution of FinTech necessitates a parallel development of RegTech. In particular, regulators must develop a robust new framework that promotes innovation and market confidence, aided by the use of regulatory "sandboxes." Certain RegTech developments today are highlighting the path toward another paradigm shift, which will be marked by a reconceptualization of the nature of financial regulation.
  • The Business of Ethics

    Source: Dr Raymond Madden, CEO
    Date Submitted: 28 Jul 2017
    Views: 1432
    Downloads: 0
    "Restoring the trustworthiness of global business will be a long-haul and there are no short-cuts when it comes to trying to embed ethical behaviour in business DNA.  But the dialogue in global board rooms is beginning to change with the importance of corporate culture, behaviours and the causal links to incentives and rewards gradually being recognised.  Our international businesses will always have responsibilities that go way beyond compliance - you cannot regulate for good behaviour.  Sustainable improvements in culture and behaviour in banking and right across the business landscape can only be achieved if individual institutions, owners, investors and the people leading and managing them step up to the plate.  As Dr Madden's thought provoking book makes clear, responsibility and accountability have to move to the top of every Board agenda".  Dame Collete Bowe, Chairman, UK Banking Standards Board.
  • RMBI Newsletter Issue 13 (Financial Crime Risk: Anti-Money Laundering and The Rise of Text Mining in Financial Markets)

    Source: Tsang Chiu Yu, Derek, Wong Ching Ip, Venice, Chiu Hok He, Angus, Li Chin Wa, Chin
    Date Submitted: 26 Jul 2017
    Views: 628
    Downloads: 0
    In the latest issue (Issue 13 – August 2017), it covers the stories of:
    Financial Crime Risk : Anti-Money Laundering Practices in Banking
    To understand anti-money laundering, we have to understand what money laundering is. Money Laundering is the process of converting illegal funds into seemingly legitimate assets with the purpose of concealing the ownership or original source of these funds. This makes it difficult for the authorities to trace the origins of the funds. To counter this, the banking sector has established a set of internal regulations and system known as anti-money laundering. These are legal controls taken by financial institutions to investigate suspicious transactions to help prevent money laundering activities within the banking sector.
    The Rise of Text Mining in Financial Markets
    The world is awash in data. Financial markets are awash in data. We are generating around 2.5 quintillion (2.5×1018) bytes of information every day, and there is an average of 4,000 brokerage reports a day comprising around 36,000 pages in 53 languages. As market participants try to maximize their competitive edge from the growing mountain of information, the nancial world increasingly feels there is a need to harness the power of big data and it has been shaping the way they acquire, analyze and utilize data. The recent development is the rapid expansion of text mining. Hence, this article will focus on the development of Text Mining technology as well as Text Mining technique.
  • Fintech - Transforming Finance

    Source: Jimmy Greer
    Date Submitted: 20 Jun 2017
    Views: 732
    Downloads: 0

    Financial Technology (FinTech) is here – sweeping through finance and, if some are to be believed, threatening traditional edifices that have stood for centuries.

    This great surge is being fronted by a host of new start-ups taking their lead from the big tech innovators. Their maverick approach is helping to push the FinTech industry into new territory across the financial services landscape, raising billions of dollars and worrying the incumbents.

    So what are the main trends and driving forces shaping FinTech today? Fintech – transforming finance explores the features of this new landscape, highlighting the many ways in which this revolution is taking place.

    For professional accountants, this new terrain will provide many opportunities as it permeates deeper and deeper into the fabric of society. From the promise of blockchain, to the demands of valuation in a digital era, finance more than ever needs an experienced, knowledgeable guide to make the most of the opportunities ahead.

  • Two insightful reports on Fintech and Distributed Ledger Technology (DLT) by Financial Services Development Council (FSDC)

    Source: Financial Services Development Council (FSDC)
    Date Submitted: 13 Jun 2017
    Views: 1690
    Downloads: 0
    Given most of the FinTech innovations, in particular the DLT, are developed for providing services directly to consumers, FinTech has initially been regarded as disruptive to the established financial institutions. However, a more recent development is that increasingly FinTech innovations are developed by, and in collaboration with, the well established incumbents in the financial sector. There are two very insightful reports on FinTech and DLT published by the FSDC in May 2017; which covers extensively the following areas including cybersecurity, payment and securities settlement, digital ID and KYC utility, WealthTech and InsurTech (including data analytics, automation and artificial intelligence), RegTech as well as Distributed Ledger Technology.  

    Attached are the two links to these two reports by FSDC.
  • Fintech Survey Report PPT 2016

    Source: Alan Lok, CFA
    Date Submitted: 29 Jul 2016
    Views: 998
    Downloads: 119
    Fintech Survey PPT 2016
  • China’s Money Market Reforms Aim to Stem Risk, Allow Funds to Thrive in Fintech Era

    Source: Alan Lok
    Date Submitted: 20 May 2016
    Views: 755
    Downloads: 12
    This is a blog posted on CFA Institute's website on 13 April 2016.