The Financial Conduct Authority (FCA), UK’s conduct regulator for financial services firms and markets, recently partnered with 11 financial regulators from different countries around the world to create the Global Financial Innovation Network (GFIN), according to its press release yesterday, August 7.
The recent alliance is, according to the FCA, part of its proposal earlier this year to create a ‘global sandbox’, which can in turn provide a more efficient means for innovative firms to work with their respective regulators to help them establish rapport with other countries in their attempt to scale new ideas. Also, it can lead to the creation of a new framework for collaboration between financial services regulators on innovative technologies and trends by sharing experiences and approaches.
Other member organizations and regulators are the following:
- Abu Dhabi Global Markets,
- Autorité des marchés financiers (Québec),
- Australian Securities and Investments Commission,
- Central Bank of Bahrain,
- United States Bureau of Consumer Financial Protection,
- Dubai Financial Services Authority,
- Guernsey Financial Services Commission,
- Hong Kong Monetary Authority,
- Monetary Authority of Singapore,
- Ontario Securities Commission, and
- Consultative Group to Assist the Poor (CGAP)
Christopher Woolard, FCA’s Executive Director of Strategy and Competition and Board member, said that the collaboration is a pivotal move for them, especially because it can “help share the experiences and knowledge from across different markets,” as well as provide a medium for innovative firms to scale their propositions on a global sandbox.
Much Bigger Cohort
A regulatory sandbox provides an avenue for firms to test innovative products, services, as well as business models, in a live market, all the while being maintained by appropriate measures courtesy of a regulating authority such as the FCA.
Among some of the aspects and technologies that the regulatory sandbox wants to improve and test are distributed ledger technology (DLT), artificial intelligence, data protection, regulation of securities and initial coin offerings (ICOs), know your customer (KYC), and anti-money laundering (AML).
Since 2014, the FCA has approved about 500 firms in its regulatory sandbox. Last month, 29 firms were included in its fourth cohort of the regulatory sandbox, where 40 percent are using DLT. According to Woolard, the said sandbox is the largest cohort to date.
And with the recent consortium among the 12 organizations, Woolard will undoubtedly see a much bigger cohort in the near future.