On 7 August 2018, the FCA, collaborating with 11 overseas financial regulators, announced the creation of the Global Financial Innovation Network (GFIN) and together they published a consultation document about this. The overseas regulators (the Regulators) include regulatory bodies from Abu Dhabi, France, Australia, Bahrain, the USA, Dubai, Guernsey, Hong Kong, Singapore and Canada.
Background
The announcement follows the initial FCA consultation on the idea of a “global sandbox” in February 2018. The feedback received on the original consultation was generally positive with the main emerging themes being as follows:
- Regulatory co-operation and engagement: Respondents were supportive of regulators collaborating on common challenges or policy questions firms face in different jurisdictions. They also welcomed the idea for a space where industry can engage with a broader group of regulatory stakeholders on a single topic or policy question.
- Speed to market: Respondents found that the global sandbox could make it faster for ideas to reach international markets, while the cross-border potential of emerging technologies or business models was also highlighted as important.
- Governance: Respondents highlighted that the sandbox process should be transparent and fair and also offered a range of potential models for testing, including transitioning from a domestic sandbox into a “global sandbox”, or TechSprints similar to those organised previously by the FCA.
- Emerging technologies / business models: A wide range of topics and subject matters were highlighted in the feedback, including artificial intelligence, distributed ledger technology, data protection, regulation of securities and Initial Coin Offerings, know your customer and anti-money laundering.
FCA Consultation Paper
The consultation paper, published by the FCA and the Regulators, provides an update on the next steps of the “global sandbox” project, which is now renamed to GFIN.
The GFIN aims to provide an efficient way for innovative firms to interact and preserve an open dialogue with the regulators while trying out new ideas. At the same time, the GFIN will provide a framework for regulators to work together sharing experiences and approaches. According to the Regulators: “The GFIN is a collaborative policy and knowledge sharing initiative aimed at advancing areas including financial integrity, consumer wellbeing and protection, financial inclusion, competition and financial stability through innovation in financial services, by sharing experiences, working jointly on emerging policy issues and facilitating responsible cross-border experimentation of new ideas“.
In additional to the general mission statements, the Regulators set out the GFIN’s key functions. More specifically, the GFIN should:
- 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.
The Regulators also inquired about the GFIN’s preferred priorities and the kind of outcomes, policy work and regulatory trials that interested parties would expect.
Next Steps
The consultation will remain open until 14 October 2018. The FCA and the Regulators committed to engage in the next two months with interested parties across the different jurisdictions involved in the project. Further feedback and an update on the next steps is expected in the Autumn.
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