reality is that innovations will always move ahead of rules. the key is in understanding whether a particular innovation or new business model is simply a regulatory arbitrage. if so, we should deal with that directly such as by bringing that activity within the regulatory ambit or even banning it altogether. another consideration is whether an innovative business model while purposeful will create incoherence or inconsistency of treatment. in such a case, a review of that regulatory policy may be necessary. there is no one - size - fits - all supervisory answer. it simply means that as regulators, we need to keep abreast with technological developments. only then, can we exercise thoughtful judgment. the fact that many financial regulators including the mas have allowed regulatory sandboxes to be set up highlights a preparedness to allow innovative financial models to first be tested within defined parameters. harnessing technology to strengthen supervision 21 there is a growing area of technology use that will be directly relevant to financial supervision – regulatory technology ( or regtech ). this is the use of advanced technology systems and algorithms to enhance risk management and regulatory compliance. 22 many financial institutions have embraced regtech, such as : predictive analytics being used in stress testing ; artificial intelligence and machine learning - powered systems to identify money laundering risks ; and cognitive computing and behavioural algorithms to detect suspicious trading and possible misconduct. 23 on the supervisor ’ s end, the mas is developing our own ‘ suptech ’ to improve and sharpen our surveillance and analytical capabilities. since about a year ago, we have set up a dedicated unit for suptech within our data analytics group. 24 the aim is to make greater use of technology and “ smart tools ” to guide our financial surveillance and supervision functions. to do so, building the infrastructure for our data analytics projects is important. we are putting in place an mas private cloud. this will serve as the foundation to provide computing power to all data analytics projects in mas. there are a number of ongoing system - enhancement projects around data storage, accessibility and usability. but importantly to fully benefit from the insights of a broader set of high - frequency real - time data, in both structured and unstructured formats, our supervisors will also need to acquire strong digital fluency in various data analytics and visualisation tools. 25 only then can we harness the full computational capabilities from better data analytics to sharpen our surveillance and understanding of different risks, and to support more effective decision - making. there is also a

ong chong tee : banking supervision - the path ahead opening address by mr ong chong tee, deputy managing director ( financial supervision ) of the monetary authority of singapore, at the 13th asia - pacific high level meeting on banking supervision, singapore, 28 february 2018. * * * mr agustin carstens, general manager, bis mr fernando restoy, chairman, fsi mr william coen, secretary general, bcbs ms chuchi fonacier, chairman, emeap wgbs and deputy governor, bsp distinguished guests, ladies and gentlemen, 1 good morning. my colleagues and i at the mas are pleased to host this 13th asia - pacific high level meeting on banking supervision. it is also my honour to be able to offer some remarks to precede the interesting panel sessions over the next two days. basel iii reforms 2 it has been a decade since the 2008 global financial crisis. since then, wide - ranging regulatory reforms have been formulated to further safeguard the stability and functioning of the global financial system. one major set of the reforms is the basel iii standards for banks ; and this includes boosting capital buffers, new liquidity requirements and limiting overall leverage. the financial stability board ( fsb ) also led work to address “ too - big - to - fail ” concerns. global systemically important banks ( g - sibs ) are now subject to higher capital, more intense supervision, and resolution planning requirements. 3 the recent finalisation of the 2017 basel iii reforms complete the post - crisis banking reform agenda. the basel committee and global banking regulators have shifted focus to implementation of the revised standards. given the considerable attention on the basel iii reforms, it is easy to forget that a core mandate of the basel committee is with respect to its work on supervisory practices. 4 so this morning, allow me to share some thoughts on three areas with respect to banking supervision : i. the next phase – beyond the review on capital and liquidity rules ; ii. banking supervision as a craft ; and iii. supervisory challenges and opportunities. the next phase 5 as many of us will be familiar, the basel iii framework has a second pillar that pertains to risk management and supervision including accounting for risks not captured under pillar 1. indeed, the basel committee devotes considerable attention to various pieces of work under this pillar, such as on stress testing, accounting standards, corporate governance and supervisory colleges. disclosure requirements are further reviewed under pillar 3 to foster market discipline. 6 following the recent finalisation