RegTech and corporate disclosure Vantage Asia

In recent times, regulators have begun to explore the use of technology to help them perform their regulatory and supervisory functions. Known as RegTech (a contraction of the terms "regulatory" and "technology") and also SupTech (a contraction of the terms'supervision' and'technology"), innovation in this area includes the use of natural language processing (NLP) – a form of artificial intelligence – to facilitate and enhance the review of documents by regulators to assess compliance with disclosure requirements. There is a broad range of documents to which such technology might be applied, including corporate accounts, corporate announcements, company prospectuses and financial product disclosure documents. Developments in RegTech have accompanied developments in FinTech (for a discussion about FinTech and smart contracts, see China Business Law Journal volume 7 issue 8: FinTech and smart contracts). This column explores the potential that NLP offers in the area of corporate disclosure, and the legal and regulatory implications that arise as a result. These implications include the following: (1) whether technology will change the way in which the language of corporate disclosure and disclosure standards are interpreted by regulators; (2) whether regulators will be able to maintain transparency in relation to how technology is used to monitor and review corporate disclosure; and (3) how to maintain an appropriate degree of human involvement and guarantee trust in the process.