On 7 August 2018, the Financial Conduct Authority (the “FCA”) has, in collaboration with 11 financial regulatory and related organisations, announced the creation of the Global Financial Innovation Network (“GFIN”).
The creation of the GFIN builds on the FCA’s proposal to create a ‘global sandbox’, which was announced earlier this year. The group would like to hear from interested regulators and related organisations who wish to get involved in the project. They are seeking views on the GFIN’s mission statement, its proposed functions and where it should prioritise its activity. The GFIN aims to provide a more efficient way for innovative firms to interact with regulators in different countries. A new framework for co-operation between financial services regulators will be formed where different experiences and approaches would be shared.
The GFIN Consultation Document sets out the main functions of the GFIN, being to:
- 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 FCA is seeking views on the mission statement, how the GFIN will work in practice, what the GFIN should prioritise and focus on in order to steer innovation in the right direction as well as ideas for how the regulators and other relevant parties should collaborate. In particular, the FCA are keen to hear responses to the questions in the GFIN Consultation Document from innovative financial services firms, financial services regulators, technology companies, technology providers, trade bodies, accelerators, academics, consumer groups and other stakeholders who are interested in being involved with the development of the GFIN.
The current GFIN members include the FCA, Abu Dhabi Global Market, Autorité des marchés financiers, Australian Securities & Investments Commission, Central Bank of Bahrain, Bureau of Consumer Financial Protection (USA), Dubai Financial Services Authority, Guernsey Financial Services Commission, Hong Kong Monetary Authority, Monetary Authority of Singapore, Ontario Securities Commission and Consultative Group to Assist the Poor. These members will be exploring the idea further, but the GFIN are keen for other regulators and related organisations to get involved after the launch and the ultimate membership of the GFIN that takes this project forward is still to be confirmed. The GFIN may be overseen by a steering group made up of some of the members, with one of the members holding the position of chair.
The FCA’s consultation in February 2018 on a ‘global sandbox’ led to the beginnings of the GFIN. With the FCA receiving 50 responses to this consultation, the feedback was generally positive and the key points to note, which the respondents cited were:
- providing a setting for regulators to collaborate on common challenges or policy questions that firms face in different jurisdictions would be helpful;
- a ‘global sandbox’ could increase the efficiency of bringing ideas to new international markets; and
- how important it is for the project to be transparent and fair to those firms wishing to apply for cross-border testing.
The responses also highlight a number of issues in relation to cross-border applications including artificial intelligence, distributed ledger technology, data protection, regulation of securities and Initial Coin Offerings, Know Your Customer (“KYC”) and Anti-Money Laundering (“AML”). The group are asking for feedback on the consultation questions outlined in the GFIN Consultation Document by 14 October 2018. Following that, the group will review the feedback and agree on next steps, including a timeline for the launch of the GFIN.