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An innovative RegTech approach to financial risk monitoring and supervisory reporting

Petros Kavassalis (Panepistemio Aigaiou, Chios, Greece)
Harald Stieber (Harvard University Weatherhead Center for International Affairs, Cambridge, Massachusetts, USA)
Wolfgang Breymann (School of Engineering, Zurcher Hochschule fur Angewandte Wissenschaften, Winterthur, Switzerland)
Keith Saxton (KS Strategic, London, UK)
Francis Joseph Gross (European Central Bank, Frankfurt am Main, Germany)

Journal of Risk Finance

ISSN: 1526-5943

Article publication date: 1 December 2018




The purpose of this study is to propose a bearer service, which generates and maintains a “digital doppelgänger” for every financial contract in the form of a dynamic transaction document that is a standardised “data facility” automatically making important contract data from the transaction counterparties available to relevant authorities mandated by law to request and process such data. This would be achieved by sharing certain elements of the dynamic transaction document on a bearer service, based on a federation of distribution ledgers; such a quasi-simultaneous sharing of risk data becomes possible because the dynamic transaction document maintain a record of state in semi-real time, and this state can be verified by anybody with access to the distribution ledgers, also in semi-real time.


In this paper, the authors propose a novel, regular technology (RegTech) cum automated legal text approach for financial transaction as well as financial risk reporting that is based on cutting-edge distributed computing and decentralised data management technologies such as distributed ledger (Swanson, 2015), distributed storage (Arner et al., 2016; Chandra et al., 2013; Caron et al., 2014), algorithmic financial contract standards (Brammertz and Mendelowitz, 2014; Breymann and Mendelowitz, 2015; Braswell, 2016), automated legal text (Hazard and Haapio, 2017) and document engineering methods and techniques (Glushko and McGrath, 2005). This approach is equally inspired by the concept of the “bearer service” and its capacity to span over existing and future technological systems and substrates (Kavassalis et al., 2000; Clark, 1988).


The result is a transformation of supervisors’ capacity to monitor risk in the financial system based on data which preserve informational content of financial instruments at the most granular level, in combination with a mathematically robust time stamping approach using blockchain technology.

Practical implications

The RegTech approach has the potential to contain operational risk linked to inadequate handling of risk data and to rein in compliance cost of supervisory reporting.

Originality value

The present RegTech approach to financial risk monitoring and supervisory reporting is the first integration of algorithmic financial data standards with blockchain functionality.



The views expressed in this paper are those of the authors alone and cannot be held to represent or anticipate views of either the European Commission or the European Central Bank.


Kavassalis, P., Stieber, H., Breymann, W., Saxton, K. and Gross, F.J. (2018), "An innovative RegTech approach to financial risk monitoring and supervisory reporting", Journal of Risk Finance, Vol. 19 No. 1, pp. 39-55.



Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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