An information paper by the Productivity Commission has highlighted how there is scope for Australia to adopt regulatory technology (regtech) beyond the financial sector, with the belief it can improve regulatory outcomes and reduce the costs of administration and compliance.
In its regulatory technology information paper [PDF], the Productivity Commission noted how Australia is “well-placed” to develop regtech solutions given its “relatively stable and sophisticated” regulatory systems, but currently, extensive use of regtech remains relatively low.
“Low awareness can dampen both demand and supply responses — business need to see value in changing their software so that developers see value in investing in applications, which in turn deliver the value businesses need to see,” the paper stated.
It went on to suggest that Australia could extend its existing use of “low-tech” solutions, including digitised data, forms, registers, and transactions to streamline business and individual transactions with government, as well as reduce compliance costs, improve the efficiency of regulatory practices, and generate flow-on benefits to the community.
Some of the specific areas that the Productivity Commission believes regtech solutions could benefit from include where regulatory environments are particularly complex to navigate and monitor, explaining that there is scope to improve risk-based regulatory approaches; technology could enable better monitoring; and technology could safely unlock more uses of data for regulatory compliance.
While regtech could improve regulatory outcome, it should not be used as a substitute for regulatory reform, the Productivity Commission warned.
The paper also examined the costs, risks, and hurdles associated with the wider adoption of regtech. It pointed out that while regtech has the potential to deliver benefits, the wide-spread implementation of it could take some years, particularly when it comes to the adoption of “advanced” regtech, which requires specialised resources and longer development times.
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Markets were risk-on on Wednesday after a jobs report confirmed the U.S. economic recovery is still on a fast-track.
The S&P 500 rose 0.5%, with the tech-heavy Nasdaq down up just 0.3%, signifying it was non-tech stocks and a broad rally doing the legwork for the major indices. The 10-Year Treasury yield rose to 0.67% fro 0.65%. Inflation expectations have been marginally improving.
Aiding sentiment in cyclicals was the ADP jobs report that showed 749,000 jobs added in September against economists estimates of 600,000. Even with questions lingering over whether the House’s proposed $2.2 trillion stimulus bill will be passed, consumer confidence was strong in September and businesses were adding employees, keeping the V-shaped economic and earnings recovery alive. Banks and oil stocks were up 1.4% and 0.5%, respectively.
“The pace of economic recovery is certainly key to future growth, and with private sector employment coming in better than expected this morning—the largest gain in 3 months—this could point to signs of strength in the labor market,” wrote Mike Loewengart, managing director of investment strategy at E*Trade in emailed remarks to reporters.
Semiconductors were down, with the iShares PHLX Semiconductor ETF (SOXX) – Get Report down 0.28%. Micron (MU) – Get Report, down 5% to $48 a share, beat revenue and earnings estimates handily Tuesday after the closing bell, but its $5.2 billion revenue guide and 47 cent earnings per share guide for the current quarter missed expectations. Huawei, about 10% of revenue, is not currently a customer.
Still, the weak enterprise spend the near-term management noted is holding back semiconductor stocks. Wednesday was also a risk-off day for growth stocks, which many semiconductor stocks are.
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