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January 31, 2019

FCA announced that the Global Financial Innovation Network (GFIN)—a group of 29 international organizations, including the FCA—is inviting applications from firms wishing to test innovative financial products, services, or business models across more than one country or jurisdiction. Since GFIN cannot override national legislation, a separate application is required to each regulator that firms would like to test with. Firms interested in applying to take part in the pilot in the UK should review the list of participating regulators and submit an application before February 28, 2019.

Each regulator will decide whether a proposed test meets its individual screening criteria, areas of interest, and ability to support the activity. Each regulator will also make sure that appropriate safeguards for their jurisdiction are in place. Regulators are only responsible for tests in their jurisdictions and should consider the associated risks. Pilot tests will run for a six-month period, unless regulators agree to extend them. FCA expects the pilots will run from the second quarter of 2019. This pilot is as much a trial for GFIN members as it will be for firms. Firms will benefit from the opportunity to test and compete in the regulated space and their tests will help inform the future work of the network. Over time, trials could inform regulatory authorities about potential areas of regulatory convergence (for example, streamlined applications), although this is being emphasized as a longer-term opportunity.

International regulators and bodies have joined forces to launch a pilot for firms that wish to test innovative products and services across international markets. The pilot tests will provide a more efficient way for innovative firms to interact with regulators across the world, as they look to scale new ideas. Each regulator will make sure that appropriate safeguards for their jurisdiction are in place for the tests. The Network has also published a Terms of Reference for the group and is encouraging other regulators and international organizations to join. The GFIN was formally launched in January 2019 by an international group of financial regulators and related organizations, including FCA. This built on the FCA’s early 2018 proposal to create a global sandbox. Currently chaired by FCA, the GFIN is an international network of organizations committed to supporting financial innovation in the interests of consumers. The network was developed following FCA’s earlier proposal to create a global sandbox. The FCA sandbox, which allows firms to test innovative ideas in a live market environment, was a first for financial services regulators across the world. 

 

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Keywords: Europe, UK, Banking, Securities, Regtech, Suptech, GFIN, Regulatory Sandbox, Cross Border Testing, FCA

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