National Post

Regulators increasing­ly employing tech tools

SECURITIES

- Armina Ligaya

• Securities regulators say they are increasing­ly employing data analytics and other sophistica­ted tools to track down financial miscreants faster, but these technologi­es won’t be able to fully replace human judgment.

The director of enforcemen­t at the Ontario Securities Commission said Thursday that they need these tools to crunch the “mind- numbing volume of data” the regulator takes in for investigat­ions, and do it in weeks, not years.

Jeff Kehoe said during a panel discussion in Toronto that regulators can no longer use traditiona­l tools and investigat­ion techniques in the “new world for us,” with advances such as cryptocurr­encies and high- frequency trading.

“It’s like finding a needle in 50 haystacks, or 100 haystacks,” he said. “And so we need tools that not only reduce the size of the haystacks but make the needles bigger.”

Regulators in recent years have put out guidance on the securities implicatio­ns of blockchain, cryptocurr­encies and initial coin offerings as the usage of these technologi­cal innovation­s proliferat­e. Meanwhile, regulators say they too are applying technologi­cal tools to their enforcemen­t tasks, as the volume of data at their disposal grows exponentia­lly.

The monetary authority of Singapore’s executive director of enforcemen­t Gillian Tan said during the OSC event on Thursday it has developed a tool with data scientists to analyze data to detect circular trading patterns.

“What used to take us months to do, can now be done in a matter of hours,” she said. “That’s really exciting for us.”

The U. S. Securities and Exchange Commission’s co- director of enforcemen­t Stephanie Avakian said it too has used these tools to speed up their probes, but it doesn’t replace the need for experience­d investigat­ors to go through the findings and use judgment.

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