Out-Law News | 08 Aug 2018 | 4:37 pm | 2 min. read
The move follows an earlier consultation held by the UK's Financial Conduct Authority (FCA) on the idea of a new 'global sandbox'.
The FCA has pioneered the operation of a regulatory sandbox to let businesses test innovative fintech solutions in a 'light touch' controlled regulatory environment. Other regulators have developed similar schemes and, across the world, many of the authorities have entered into bilateral agreements to help businesses testing fintech solutions via their sandbox regimes to deliver their products and services in other jurisdictions.
To-date, though, no multi-jurisdiction sandbox initiative has been developed.
However, a number of financial services regulators from across Europe, the Middle East, Asia Pacific and North America have now come together to propose a new framework through which "cross border trials" could take place.
The framework proposed would be delivered via a new Global Financial Innovation Network (GFIN). The FCA is one of 12 initial members of GFIN. Other members include regulators from Australia, the US, Canada, Hong Kong, Singapore, Dubai, Bahrain, Abu Dhabi and Guernsey. A consultation on the proposed functions of the GFIN (21-page / 793KB PDF) was opened earlier this week.
"There is currently no global platform allowing firms to trial new ideas with consumers or other market participants in multiple jurisdictions working with the appropriate regulatory authorities," the consultation paper said. "Facilitating cross border trials is about ensuring the potential benefits of financial innovation are shared across jurisdictions with consumers, regulatory authorities and other market participants."
"Such a function should also work on an opt-in basis for regulators to allow flexibility and discretion on the part of those involved. Innovations that do not fit within the existing regulatory framework could benefit from this function. Likewise, it would provide regulators an opportunity to observe emerging business models and technology up close to help inform policy and supervisory work. We see the potential benefits to regulators as important as the benefits to firms," it said.
According to the consultation paper, the GFIN would also let financial regulators "build on existing collaboration and allow information sharing to occur on a deeper, larger and quicker scale".
"A network of regulators from around the world that shares knowledge and best practice relating to innovation, technological trends and emerging issues represents an iterative change from the current mode of collaboration in this space," it said.
The consultation on the GFIN proposals is open until 14 October.
Christopher Woolard, FCA executive director of strategy and competition, said: "The creation of the Global Financial Innovation Network (GFIN) is an important next step for organisations like ours who are actively engaged in understanding and harnessing the benefits of innovation in financial services for consumers, while managing the potential harm. The establishment of the GFIN can help share the experiences and knowledge from across different markets, while also providing a platform for innovative firms wishing to scale their propositions via testing in multiple countries."