12 regulatory bodies from around the world creates the Global Financial Innovation Network

The UK’s Financial Conduct Authority has collaborated with 11 regulatory bodies from Europe, the Far East and the US on the creation of a Global Financial Innovation Network (GFIN), building on proposales earlier this year to create a cross-jurisidctional fintech sandbox. Having launched the world’s first domestic regulatory sandbox in 2016, the FCA in February floated the possibility of a global version, enabling fintech firms to carry out tests in different countries at the same time and helping watchdogs to identify and solve common cross-border problems.

The Financial Conduct Authority (FCA) has, in collaboration with 11 financial regulators and related organisations, announced the creation of the Global Financial Innovation Network (GFIN), building on the FCA’s proposal earlier this year to create a ‘global sandbox’.

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 collaborative effort, involving regulators from around the world, is also today launching a consultation on the role the GFIN should play in delivering its objectives, including the tools it will use.

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.

As part of the consultation, the group is 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.

Christopher Woolard, FCA Executive Director of Strategy and Competition and Board member commented:

“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.”

Today’s announcement follows an initial consultation on the idea of a ‘global sandbox’ in February 2018 and provides an update on the next steps of the project. 50 responses were received to the earlier paper and were positive about the idea of regulators collaborating on this topic.

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).

The working group is asking for feedback on the consultation questions by 14 October 2018. Over the course of the next two months, the group will engage with interested parties across the different jurisdictions involved in the project. In the Autumn, the working group will assess feedback and agree on next steps.

The organisations involved in the GFIN at present are: Abu Dhabi Global Markets; Autorité des marchés financiers (Québec); Australian Securities & Investments Commission; Central Bank of Bahrain; United States Bureau of Consumer Financial Protection; Dubai Financial Services Authority; Financial Conduct Authority; Guernsey Financial Services Commission; Hong Kong Monetary Authority; Monetary Authority of Singapore; Ontario Securities Commission; and Consultative Group to Assist the Poor (CGAP).