Prudential supervisory disclosure (PSD) with supervisory technology (SupTech): lessons from a FinTech crisis

Artikel

The U.S. financial markets faced an unprecedented rapid decline and recovery on May 6, 2010, known as the May 6 flash crash. Roughly one trillion $ market value in less than thirty minutes vanished with the biggest one-day point decline in the history of the DJIA at the time. Since the market events took place in electronic markets, and algorithmic trading and high-frequency trading, parts of FinTech, played significant roles, we handle the May 6 flash crash from the FinTech, SupTech, and financial supervision perspectives. With the flashback method, we analyzed the reactions of market participants, media, and two financial supervisors, the SEC, and the CFTC, to the market crash. We find that the technological imbalance between financial markets or institutions and their supervisors drove the markets in uncertainty, hence in a fear and panic environment. Since the imbalance has not diminished yet, the same risks still exist. As a remedy, we introduce a new concept and model with a well-functioning SupTech system to cope with the May 6 type FinTech crises.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: International Journal of Disclosure and Governance ; ISSN: 1746-6539 ; Volume: 18 ; Year: 2021 ; Issue: 4 ; Pages: 315-335 ; London: Palgrave Macmillan UK

Classification and Topics

• Classification: Recht ; Market Design ; General Equilibrium and Disequilibrium: Financial Markets ; General Financial Markets: Government Policy and Regulation ; Financial Crises ; Financial Institutions and Services: Government Policy and Regulation ; Structure, Scope, and Performance of Government ; Business and Securities Law ; Regulated Industries and Administrative Law ; Information and Product Quality; Standardization and Compatibility ; Innovation and Invention: Processes and Incentives ; Management of Technological Innovation and R&D
• Subject: Supervisory technology ; SupTech ; FinTech ; RegTech ; Financial supervision ; Financial system ; Prudential supervisory disclosure ; Financial authority ; Digital finance ; May 6 flash crash ; FinTech crises ; Financial crises ; Financial stability ; Informational efficiency ; Systemically important data ; Systemically important markets ; Know-your-data ; Know-your-technology ; Know-your-markets ; Inform-your-markets

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Zeranski, Stefan ; Sancak, Ibrahim E.
• Event: Veröffentlichung
• (who): Palgrave Macmillan UK
• (where): London
• (when): 2021

Further information

• DOI: doi:10.1057/s41310-021-00111-7
• Last update: 10.03.2025, 11:44 AM CET