The Financial Conduct Authority (FCA) has, in collaboration with 11 financial regulators and related organisations, on 7 August 2018 announced the creation of the Global Financial Innovation Network (GFIN), building on the FCA’s proposal earlier this year to create a ‘global sandbox’.
As part of the consultation, the group is also seeking views on the mission statement for the GFIN, its proposed functions, and where it should prioritise activity. The group is also keen to hear from other interested regulators or related organisations who wish to get involved.
The network will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. It will also create a new framework for co-operation between financial services regulators on innovation related topics, sharing different experiences and approaches.
The consultation sets out the three main functions of the GFIN:
- act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models;
- provide a forum for joint policy work and discussions; and
- provide firms with an environment in which to trial cross-border solutions.
We are keen to hear from all interested parties on the mission statement, how this network will work in practice, what this network should prioritise and focus on to encourage innovation in the right way and ideas for how regulators and other stakeholders can work together to take it forward.
We encourage innovative financial services firms, financial services regulators, technology companies, technology providers, trade bodies, accelerators, academia, consumer groups and other stakeholders keen on being part of the development of the GFIN to respond to the questions in the paper.
The current GFIN membership is the following:
- Abu Dhabi Global Market (ADGM),
- Autorité des marchés financiers (AMF, Quebec)
- Australian Securities & Investments Commission (ASIC)
- Central Bank of Bahrain (CBB)
- Bureau of Consumer Financial Protection (BCFP, USA)
- Dubai Financial Services Authority (DFSA)
- Financial Conduct Authority (FCA, UK)
- Guernsey Financial Services Commission (GFSC)
- Hong Kong Monetary Authority (HKMA)
- Monetary Authority of Singapore (MAS)
- Ontario Securities Commission (OSC, Canada)
- Consultative Group to Assist the Poor (CGAP)
The GFIN is designed to be an inclusive community of financial services regulators and related organisations. The eventual membership of the GFIN that take this project forward is still to be determined. The named organisations above are committed to exploring the idea further, but the consultation process will help inform any future involvement. Similarly, regulators not named may decide to get involved in the future, or after the formal launch of the GFIN.
The network may be overseen by a steering group made up of a smaller number of members. The steering group would be chaired by one of the members, the role of the chair is envisioned to be that of a coordinator.
FCA’s Global Sandbox Consultation
The creation of the GFIN follows the FCA’s consultation in February 2018 on the idea of a ‘global sandbox’. The FCA received 50 responses to this consultation. Overall, feedback to the consultation was positive. Key themes to emerge in the feedback were:
- Regulatory co-operation: Respondents were supportive of the idea of the initiative providing a setting for regulators to collaborate on common challenges or policy questions firms face in different jurisdictions.
- Speed to market: Respondents cited one of the main advantages for the global sandbox could be reducing the time it takes to bring ideas to new international markets.
- Governance: Feedback highlighted the importance of the project being transparent and fair to those potential firms wishing to apply for cross-border testing.
- Emerging technologies/business models: A wide range of topics and subject matters were highlighted in the feedback, particularly those with notable cross-border application. Among issues highlighted were artificial intelligence, distributed ledger technology, data protection, regulation of securities and Initial Coin Offerings (ICOs), know your customer (KYC) and anti-money laundering (AML).
Please send us your views by emailing us at [email protected] by 14 October 2018. We look forward to hearing from you.