In June 2019, the Global Financial Innovation Network (GFIN) released its ‘One Year On’ Report, reflecting on its first year of operation (the Report). 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 sector. You can read more about GFIN here.
GFIN overview
Currently, GFIN’s membership comprises 35 financial regulators and supervisors from 21 jurisdictions. GFIN also has 7 non-regulator Observers, including international organisations such as the International Monetary Fund (IMF) and the World Bank. The Coordination Group is responsible for the oversight of GFIN. GFIN is not a standard setting body itself, but it may seek to ‘build on and complement’ the work of standard setting bodies through ‘targeted engagement’.
According to the Report, GFIN will be focusing on three main workstreams:
- The collaboration workstream will be assisting the Coordination Group and will be exploring ways to promote collaboration and the sharing of experiences between regulators on innovation. The aim is to create a forum for the discussion of lessons learned and provide firms with guidance on how different regulators approach innovation in different jurisdictions.
- The cross-border testing workstream is responsible for cross-border testing of innovative products and services. The key objective is to allow firms to test their offerings simultaneously in multiple jurisdictions and compete in a true market environment within the regulated space. This builds on, and connects, national regulatory “sandboxes” in order to allow firms to test products on a multi-national basis.
- The RegTech & lessons learned workstream will focus on ways to promote sharing of regulatory technology (RegTech) knowledge and collaboration on issues of mutual interest. For instance, this could include enhancing cross-border efficiencies through the development of machine executable regulations.
The Report also gives examples of regulatory initiatives aiming to promote innovation in Australia, Dubai and Hong Kong. Regarding the UK, the Report discusses TechSprints, which are events organised by the Financial Conduct Authority (FCA) that bring together participants from several sectors to discuss technology-based ideas. The next TechSprint will take place this month (July 2019) and will explore ways of facilitating information sharing, in compliance with data protection rules.
Cross-border testing: Pilot phase and lessons learned
GFIN launched a pilot phase for cross-border testing in January 2019. The idea is to facilitate the testing of innovative ideas simultaneously across several jurisdictions. You can read more about this here. According to the Report, the first cohort received over 40 responses, with applicants focusing on areas such as RegTech, retail investments and cryptoassets. The 8 firms that were accepted in the next phase were asked to develop testing plans with the assistance of GFIN members. Those firms with suitable testing plans will then participate in the pilot testing phase.
Going further, the Report highlights the need to streamline the process for assessing firms’ eligibility for cross-border tests. Speed to market is key and therefore the aim is to make testing as quick and efficient as possible. In addition, it is important to clarify what firms should expect from cross-border tests and to explain the limitations of the GFIN.
and then 