With the aim of building Singapore into a smart financial centre where innovation is pervasive and technology is used widely, the Monetary Authority of Singapore (MAS) issued a consultation paper on 6 June 2016 proposing guidelines for a regulatory sandbox. The consultation was directed at financial institutions (FIs) as well as financial technology (FinTech) players looking to experiment with innovative financial products, services or processes that are or are likely to be regulated by MAS. Within the confines of this regulatory sandbox, MAS proposed to relax specific legal and regulatory requirements to prevent promising innovations from being stifled and opportunities being missed by FIs and FinTech start-ups, which might otherwise err on the side of caution where it is less clear whether a new financial product or service complies with legal and regulatory requirements.
MAS has since, on the 16 November 2016, taken into account the feedback received and published the following for reference by any firm that is looking to apply technology in an innovative way to provide new financial services that are or are likely to be regulated by MAS:
- FinTech Regulatory Sandbox Guidelines;
- Sandbox Application Template; and
- Frequently Asked Questions on MAS fintech regulatory sandbox
FinTech Regulatory Sandbox Guidelines
According to MAS, the guidelines incorporate feedback from the public consultation as well as learning points from actual sandbox applications. The aim of the guidelines is to improve the clarity, flexibility and transparency of the regulatory sandbox:
- improved clarity: examples and elaborations are included to illustrate MAS’ expectations on the sandbox such as the evaluation criteria for entry into the sandbox;
- greater flexibility: the guidelines have relaxed a number of evaluation criteria for firms looking to enter a sandbox, and allow room for adjustments during experimentation as firms learn from market responses; and
- increased transparency: MAS will work closely with sandbox applicants in the evaluation and experimentation process and MAS will publish on its website relevant information on approved sandbox applications.
There are no administrative charges for submitting a sandbox application. However, MAS expects applicants to have conducted their due diligence, such as testing the proposed financial service in a laboratory environment and knowing the legal and regulatory requirements for deploying the proposed financial service, prior to submitting an application.
MAS has committed to inform the applicants on the potential suitability of their FinTech service to be in a sandbox within 21 working days of receiving the application that includes a complete set of information necessary for the assessment. This preliminary indication serves to help the applicant with its business and resource planning, particularly for start-ups.
MAS has summarised the sandbox and its evaluation criteria in the following infographic:
Examples and Templates
Annexed to the guidelines are examples provided by MAS of the legal and regulatory requirements that MAS may consider relaxing for the duration of the sandbox, as well as those which MAS intends to maintain.
MAS has also provided an Application Template which sets out the necessary supporting information required from applicants to depict how the sandbox evaluation criteria listed below can be fulfilled.
To illustrate the application and approval process, MAS has provided a case study on how an application that meets MAS’ expectations is processed, which will allow for a sandbox to be implemented.