FCA announced its intention to pilot a digital sandbox to provide enhanced regulatory support to fintech and regtech firms tackling challenges caused by the COVID-19 pandemic. FCA is planning the digital sandbox in collaboration with the industry and key strategic partners and is planning to open applications for the sandbox later in the Summer. Shortly, FCA plans to publish specific proposals for launching a coronavirus pilot of the digital sandbox and will ask industry feedback on these proposals.
The regulatory approach of FCA supports innovators and innovative firms through its Innovation Hub, Regulatory Sandbox, and TechSprint program. Prior to the pandemic, FCA had been exploring the concept of a digital sandbox. This would enhance some key features of the innovation services of FCA, allowing innovative firms to test and develop proofs of concept in a digital testing environment. There is also an important convening role for FCA to play in helping to enable greater collaboration to solve complex industry-wide problems. FCA is, therefore, accelerating its plans and will pilot aspects of the digital sandbox on a modular basis to provide support to innovative firms during the crisis. The following features could be the foundations of a digital sandbox:
- Access to high-quality data assets, including synthetic or anonymized data sets to enable testing and validation of technology solutions
- Identification of areas of regulatory interest (as with the latest sandbox cohort) where FCA would like to see innovation play a greater role or issue specific challenges
- A collaboration platform to facilitate diversity of thinking, share lessons learned, and foster an ecosystem around solving complex industry-wide challenges
- An observation deck to enable regulators and other interested parties to observe in-flight testing at a technical level, to inform policy thinking in a safeguarded environment
- Application programming interface (API) or vendor market place where fintech, regtech, and other vendors can list their solutions and APIs, to encourage greater interoperability and foster a thriving ecosystem.
- Access to regulatory support such as development of testing plans, sign posting to relevant regulations, informal steers, or support to understand the wider regulatory environment or the authorization process.
FCA will pilot these features of the digital sandbox and tools to support firms developing specific use cases and will evaluate the effectiveness of a feature or tool through this pilot.
Related Link: Update on Digital Sandbox
Keywords: Europe, UK, Banking, Insurance, Securities, Digital Sandbox, COVID-19, Regtech, Fintech, FCA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.