The changing nature of ‘Regulation by Information’: Towards real‐time regulation?

Abstract The concept of ‘Regulation by Information’ is changing. Past such approaches consisted mainly of signalling regulatory intent and indirectly guiding how and when regulatory discretion should be exercised. We suggest that this conceptual understanding must be reviewed in view of developing regulatory technologies (RegTech) allowing for a far more proactive integration of data flows into regulatory processes. RegTech is thereby changing conditions of Regulation by Information. This article uses financial regulation as an information‐intensive and highly regulated policy field to illustrate and analyse RegTech‐induced changes to conditions of Regulation by Information. It finds that the rise of near real‐time information flows between market participants and regulatory bodies and, consequently, the need for near real‐time regulatory responses on the European Union level have led to an ever higher degree of integration of regulatory software into market data flows. Regulatory software now increasingly shapes the definitions of reporting standards and formats, which in turn shape regulatory choices by influencing information flows. The article shows how this development will likely be used in other data‐ and information‐dense policy areas outside of financial markets. Critics of Regulation by Information argue that it can lead to a lack of accountability and transparency, increasing the democratic deficit within the European Union. This article scrutinises both continuities and changes in the role and significance of legal principles and procedures used in regulatory oversight, following the evolution of this new form of Regulation by Information within the EU.