FCA consults on global financial innovation network

The Financial Conduct Authority (FCA) is consulting on plans to create a global financial innovation network (GFIN), in collaboration with 11 financial regulators and related organisations, which will build on its proposal earlier this year to create a ‘global sandbox’ for new concepts and finance models

The network will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. It will also create a new framework for co-operation between financial services regulators on innovation related topics, sharing different experiences and approaches.

The consultation will examine the role the GFIN should play in delivering its objectives, including the tools it will use.

The three main functions of the GFIN are to act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models; to provide a forum for joint policy work and discussions; and to provide firms with an environment in which to trial cross-border solutions.

As part of the consultation, the group is seeking views on the mission statement for the GFIN, its proposed functions, and where it should prioritise activity. The group is also keen to hear from other interested regulators or related organisations who wish to get involved.

Christopher Woolard, FCA executive director of strategy and competition and board member said: ‘The creation of the GFIN is an important next step for organisations like ours who are actively engaged in understanding and harnessing the benefits of innovation in financial services for consumers, while managing the potential harm.

‘The establishment of the GFIN can help share the experiences and knowledge from across different markets, while also providing a platform for innovative firms wishing to scale their propositions via testing in multiple countries.’

The latest announcement follows an initial consultation on the idea of a ‘global sandbox’ in February 2018. This which received 50 responses which were positive about the idea of regulators collaborating on this topic.

Respondents supported the idea of the initiative providing a setting for regulators to collaborate on common challenges or policy questions firms face in different jurisdictions, and thought one of the main benefits from a global sandbox would be reducing the time it takes to bring ideas to new international markets.

The feedback identified a wide range of topics and subject matters with cross-border applications which could be under consideration, including artificial intelligence, distributed ledger technology, data protection, regulation of securities and initial coin offerings (ICOs), know your customer (KYC) and anti-money laundering (AML).

The working group is asking for feedback on the consultation questions by 14 October and says it will assess feedback and agree on next steps in the autumn.

The organisations involved in the GFIN at present are:

  • Abu Dhabi Global Markets,
  • Autorité des marchés financiers (Québec),
  • Australian Securities & Investments Commission,
  • Central Bank of Bahrain,
  • United States Bureau of Consumer Financial Protection,
  • Dubai Financial Services Authority,
  • Financial Conduct Authority,
  • Guernsey Financial Services Commission,
  • Hong Kong Monetary Authority,
  • Monetary Authority of Singapore,
  • Ontario Securities Commission, and
  • Consultative Group to Assist the Poor (CGAP).

Global Financial Innovation Network consultation is here

Report by Pat Sweet

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