Out-Law News | 24 Feb 2017 | 3:21 pm | 2 min. read
Under the agreement (8-page / 252KB PDF), the Ontario Securities Commission (OSC) will refer businesses it supports through its 'OSC LaunchPad' scheme to the UK's Financial Conduct Authority (FCA) where the Canadian businesses wish to also operate in the UK.
The OSC LaunchPad is the OSC's equivalent of 'Project Innovate', an FCA initiative designed to encourage innovation in fintech, which includes a regulatory sandbox for testing new ideas in a light-touch regulatory environment.
The agreement will also allow UK-based businesses that work with the FCA through Project Innovate to benefit from OSC assistance in order to set up business in Ontario.
According to the agreement, the FCA and OSC "share a mutual desire to promote innovation in financial services in their respective markets".
The agreement contains a system of referral between the FCA's Project Innovate and OSC LaunchPad. Businesses that are referred will initially be able to "discuss the authorisation application process" with the regulator, as well as "any regulatory issues that [they have] identified", and is designed to ensure those businesses understand the relevant regulations in the new jurisdiction and what those rules means for them.
The agreement also envisages the regulators providing assistance to the fintechs during the authorisation process, and after authorisation has been granted. It also provides for information sharing between the FCA and OSC on broad issues such as emerging market trends and regulatory issues pertaining to fintech, as well as the exchange of information relating to the businesses that have received support through the cooperation scheme.
Christopher Woolard, executive director of strategy and competition at the FCA, said the agreement with the OSC is "a positive step towards promoting financial innovation in each of our respective markets".
Woolard said: "It provides fintech businesses in Ontario and the UK with ready access to the regulatory support they need and we look forward to welcoming firms referred to us by the OSC to assist them in understanding the UK market and its financial regulation."
Maureen Jensen, chair and chief executive of the OSC, said: "Since unveiling OSC LaunchPad last year, we are hearing from many emerging businesses that offer innovative services, products and applications of benefit to investors. Many of these businesses are also seeking to expand globally, and this agreement reflects our ongoing commitment to enhancing their regulatory experience."
Ontario encompasses Toronto, Canada's most populated city, and Ottawa, Canada's capital. Toronto is Canada's main financial services centre. It is home to more than half of the world's top 10 banks, Canada's biggest five banks and the Toronto Stock Exchange (TSX), and the province of Ontario is also home to a large number of technology companies.
According to a report by Z/Yen Group (34-page / 2.35MB PDF), which was commissioned by the Toronto Financial Services Alliance (TFSA), Toronto is the world's fifth leading fintech centre, behind London, San Francisco, New York and Singapore, but ahead of Hong Kong, Sydney and Frankfurt.
The cooperation agreement signed with the OSC is the latest deal the FCA has struck with an international regulator with the aim of supporting fintech.
In December last year, the FCA and Hong Kong Monetary Authority (HKMA) signed a similar agreement. The FCA has also agreed frameworks for fintech cooperation with regulators in Australia, Singapore, South Korea, and China.