In response to technological and socio-political change, financial regulation has become increasingly complex. This complexity is characterised by the diversity of markets, products and jurisdictions and the diverging ways stakeholders in the financial system share information about regulatory obligations. The absence of a common approach for comparing different regulatory regimes creates a challenge for both regulators and regulated firms. The Regulatory Genome Project (RGP) has been established as a response to this gap.
The RGP mission is to develop and support adoption of the Cambridge Regulatory Genome (CRG), an open information structure that enables regulatory obligations to be organised and compared across jurisdictions.
Developing the Cambridge Regulatory Genome
The Cambridge Regulatory Genome (CRG) is an information structure being developed by Cambridge Judge Business School. It is machine-readable and classifies regulatory obligations into jurisdiction-agnostic taxonomies organised by regulatory theme.
The taxonomies in the Cambridge Regulatory Genome are designed to be shallow ‘root taxonomies’ that categorise obligations to a level that supports the regulatory community with baseline comparative analysis. The intention is to ensure these taxonomies remain relevant to a broad range of users. The level of detail and functionality of the taxonomy can be increased by developing extensions to the root.
As of March 2022, eleven taxonomies have been produced in beta version. The development of the Cambridge Regulatory Genome is expected to continue until at least 2023 and will be made available as an open access resource.
Supporting adoption of the CRG
The taxonomies in the Cambridge Regulatory Genome will be publicly available. This supports the RGP mission of broad adoption and provides two important benefits:
- The taxonomies are not static. Deployment at scale produces a data network effect that facilitates feedback, enabling the taxonomies to be modified over time.
- Broad adoption of a shared information structure makes it easier to develop interoperable RegTech ecosystems that are better equipped to produce regulatory applications that can serve the needs of regulatory authorities and the firms they regulate.
The RGP supports adoption through:
Building an RGP regulator community
Learn more about the RGP Regulator Engagement Programme open to the financial regulator community.
How the RGP emerged from the RegSimple project
The RGP has emerged from over five years of research undertaken in the Cambridge Centre for Alternative Finance (CCAF). In 2018, the CCAF launched the RegSimple Project to develop a software application (called RegSimple) which allows fintech firms to easily compare regulations across jurisdictions. The pilot phase was funded by the Omidyar Network with follow-on grant funding of £1m from the UK Foreign & Commonwealth Development Office (FCDO) to expand RegSimple functionality to support the regulatory policy development needs of regulators in developing economies.
While the RegSimple Project focused on software application development, it included a workstream to ‘translate’ human readable content published by regulatory authorities into a machine-readable form that could be ‘read’ by the RegSimple application. The CCAF team had to build a repository because they were unable to source a commercially available standardised repository of machine-readable regulatory content; what was being produced was in a non-standardised form and created by regulatory application providers specifically to work with their own proprietary applications.
This lack of standardisation means regulatory applications using regulatory content like RegSimple are not interoperable, thus creating friction in the development and adoption of innovative regulatory applications. At the same time, a growing number of regulators are embarking on projects to create machine readable versions of their own rule books, with each regulator inadvertently contributing to the content structure fragmentation problem by using a different structure to organize their regulatory content.
The Cambridge Regulatory Genome (CRG) is a continuation of this workstream begun by the CCAF, building further upon the information structure behind RegSimple. It will be available as a public good and, if broadly adopted, will make it easier to develop interoperable RegTech ecosystems.
The RGP structure
The RGP has been established by two founding partners:
- Cambridge Judge Business School (CJBS): developing the Cambridge Regulatory Genome, as well as convening regulators and RGP sponsors, and engaging with grant funding bodies and public institutions to support the RGP mission.
- RegGenome: a University of Cambridge spin-out, licensed by the University to create its own data layer on top of the Cambridge Regulatory Genome, and it is building a repository of machine-readable regulatory requirements. RegGenome manages the RGP special interest group (SIG) engagement with industry. It is also contributing core services to the RGP to enable output from the technology transfer to flow back into the project for the benefit of stakeholders in public institutions that are collaborating with the RGP via engagement with CJBS.