The Global Financial Innovation Network (GFIN) launched officially in January 2019. The GFIN is an international network of financial services regulators and relevant organisations, designed to support regulatory collaboration and cross-border testing of innovative products and technologies in the financial services sector. It builds on the concept of a ‘global sandbox’, an idea the UK’s Financial Conduct Authority (FCA) introduced a year ago. The launch follows a public consultation on the proposed GFIN’s functions and operation. You many find the consultation paper here and our summary here.
GFIN Membership and functions
The GFIN currently consists of 29 regulators and other organisations from several jurisdictions, including the UK, Australia, Hong Kong, Israel, United Arab Emirates and Kenya. The International Monetary Fund and the World Bank Group are involved as observers.
GFIN is ‘a collaborative knowledge sharing initiative’ focused on the practical application of technology in the financial services sector. The aim is to allow for responsible cross-border testing of new product ideas and to enhance regulatory clarity by developing knowledge through lessons learned and the sharing of experiences. GFIN workstreams will explore how financial innovation may contribute to financial integrity, consumer protection, financial inclusion, competition and financial stability. The initiative also seeks to improve access to information for firms and facilitate their interaction with regulators.
In particular, according to its Terms of Reference for Governance and Membership, the GFIN’s primary functions include:
- establishing a cooperation framework that will allow regulators to collaborate and share experience regarding innovation;
- providing a forum for joint regulatory technology (so called ‘RegTech’) work that will facilitate knowledge sharing / lessons learned; and
- creating an environment, where firms can test cross-border innovative solutions, products and business models.
Cross-border testing – pilot phase
A key objective is to allow firms to test their innovative products simultaneously in multiple jurisdictions and compete in a true market environment within the regulated space. GFIN regulators participating in the pilot phase, include Australia, Canada, Hong Kong, Lithuania, Singapore, Bahrain, Abu Dhabi and Dubai.
The FCA has already opened the application window for the pilot phase. It is important to note that interested firms should submit separate applications to each regulator and independently meet the eligibility criteria and standards set by them in all jurisdictions they wish to test in. The applications will be assessed on the basis of individual screening criteria, areas of interest, and ability to support the proposed activity. Each regulator will remain responsible for monitoring risks and ensuring high standards of consumer protection and market integrity in their respective markets.
Firms should submit their testing applications to the relevant regulators by 28 February 2019. The pilot phase is expected to take place during Q2 2019 and will run for six months, with the possibility of further extension.
and then 