Building and Performance Validation of a Digital Twin Regulatory Framework for Financial Compliance and Market Transparency

Building and Performance Validation of a Digital Twin Regulatory Framework for Financial Compliance and Market Transparency | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Building and Performance Validation of a Digital Twin Regulatory Framework for Financial Compliance and Market Transparency Xiaoxiong Gu, Xia Tian, Jingwen Yang, Min Liu This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8220545/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Proposes Reg-Twin—a digitalization of the end-to-end process from transaction → alert → case → SAR/SEC reporting. It incorporates a built-in policy rule engine, reconciliation and drift monitoring, and strategy A/B sandboxing. Through hash-chain data inheritance + selective zero-knowledge proofs (ZK), it demonstrates key compliance points to regulators without data leakage. In simulations and replays across 3,500+ funds and 70+ institutions: - Consistency defects reduced by 41% - Cross-report discrepancies decreased by 36% - Closing cycles shortened by 22% - Estimated alert volume/personnel efficiency/SLA error for strategy changes ≤ ±5% ZK proofs minimize sensitive field disclosure while enabling auditable verification. Reg-Twin demonstrates a technical pathway where enhanced transparency coexists with reduced compliance costs. Management Other Business RegTech Digital Twin Data Lineage Zero-Knowledge Proof Data Consistency Governance Automated Reporting Strategy Sandbox Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8220545","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":551655151,"identity":"69208e0e-4d8c-4a53-b931-0d1b13bef73e","order_by":0,"name":"Xiaoxiong Gu","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA30lEQVRIiWNgGAWjYBACAyR2AjNDBZBiZm4gTgsPWMsZkBZG4rUAFbeBmAS0mEskP3zwo6JO3l4i4Zl04TybaP52oJYfFdtwarGckWZs2HOGzbBHIiFNeua2tNwZhxkbGHvO3MbtsBs5bNKMbTyMYC282w7nNgC1AF1IUIuEPUTLnP+584nUYpAI0dJwIHcDIS2WPc9AfklI7jnzINl6xrHk3I1ALQfx+cWcHRJitu3tOYm3C2rscuedP3wQKIJbC4NAAoyRkwAXPIBbPRDww6T5j+NXOApGwSgYBSMXAABMbFemdeUbKQAAAABJRU5ErkJggg==","orcid":"","institution":"UBS Business Solutions (China) Limited, Shanghai, 200120, China","correspondingAuthor":true,"prefix":"","firstName":"Xiaoxiong","middleName":"","lastName":"Gu","suffix":""},{"id":551655152,"identity":"6ae55cb1-2064-4f3c-8463-bb8b7b3a6daa","order_by":1,"name":"Xia Tian","email":"","orcid":"","institution":"UBS, Shanghai, China","correspondingAuthor":false,"prefix":"","firstName":"Xia","middleName":"","lastName":"Tian","suffix":""},{"id":551655153,"identity":"3bf4ebac-f511-4deb-9fc9-24a28f8211ef","order_by":2,"name":"Jingwen Yang","email":"","orcid":"","institution":"University College London, London, United Kingdom","correspondingAuthor":false,"prefix":"","firstName":"Jingwen","middleName":"","lastName":"Yang","suffix":""},{"id":551655154,"identity":"3f581d96-9355-4d02-8ce1-74b0fad674c2","order_by":3,"name":"Min Liu","email":"","orcid":"","institution":"HSBC Bank (China) Company Limited, Shenzhen, 518000, China","correspondingAuthor":false,"prefix":"","firstName":"Min","middleName":"","lastName":"Liu","suffix":""}],"badges":[],"createdAt":"2025-11-27 09:48:50","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-8220545/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8220545/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":97141355,"identity":"06c950b3-e3b6-467c-802e-e0b33c36badf","added_by":"auto","created_at":"2025-12-01 10:06:37","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":401417,"visible":true,"origin":"","legend":"","description":"","filename":"4BuildingandPerformanceValidationofaDigitalTwinRegulatoryFrameworkforFinancialComplianceandMarketTransparency.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8220545/v1_covered_a7afe8fb-e631-4f71-8d2f-0068540bea19.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003e\u003cstrong\u003eBuilding and Performance Validation of a Digital Twin Regulatory Framework for Financial Compliance and Market Transparency\u003c/strong\u003e\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"RegTech, Digital Twin, Data Lineage, Zero-Knowledge Proof, Data Consistency Governance, Automated Reporting, Strategy Sandbox","lastPublishedDoi":"10.21203/rs.3.rs-8220545/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8220545/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eProposes Reg-Twin—a digitalization of the end-to-end process from transaction → alert → case → SAR/SEC reporting. 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