FinTech Industry & Regulation – Page 28 – FinTech and Blockchain Law Watch

UK and Hong Kong sign cooperation agreement

Dec 14 2016

FinTech companies and other innovative financial businesses will be given help to establish overseas operations in the UK and Hong Kong by regulators in those countries under a new cooperation agreement signed in London on 9 December 2016. Under the agreement, the UK’s Financial Conduct Authority (FCA) and the Hong Kong Monetary Authority (HKMA) will “refer to each other innovator businesses that would like to operate in the other authority’s jurisdiction”.

Upon a referral being received, the FCA or HKMA both intend to “assist the innovator businesses in understanding the regulatory regime” that they oversee and explain “how such regimes may be relevant” to those companies. The agreement also confirms that the FCA and HKMA intend to “share information about innovations in financial services in their respective markets”, such as on emerging trends and regulatory issues pertaining to innovation. The FCA and HKMA may also pursue “joint innovation projects on the application of novel financial technologies”, share expertise and knowledge, and facilitate staff secondments to one another, under the new cooperation agreement.

Will there be an Asia Pacific ‘FinTech Passport’ in the future?

Dec 14 2016

By Jim Bulling and Michelle Chasser

Australian Securities and Investments Commission (ASIC) Chairman, Greg Medcraft, has discussed cooperation between FinTech regulators at the recent International Institute of Finance Chief Risk Officer Forum in Singapore.

The Chairman noted “because the internet knows no boundaries” cooperation and collaboration between regulators is critical and developing responses to FinTech should not be done in isolation. The Chairman then highlighted the following steps required for cooperation.

1. Sharing information

Regulators in Australia, UK, Singapore, Canada, Kenya, South Korea, Switzerland and India have entered into various cooperation agreements with other regulators to share information about FinTech developments and emerging trends in their markets. Many of the cooperation agreements also allow FinTech businesses to access Innovation Hubs in other jurisdictions. The Chairman noted that ASIC was also informally in regular contact with regulators in the US and Europe.

2. Harmonisation

While ideally regulators would work towards harmonising their regulatory responses and approaches, it was acknowledged that this will be a challenge due to competition between countries to attract FinTech businesses. The Chairman raised the possibility of introducing a “fintech passport” which could ease entry into other jurisdictions for businesses. Another possible solution raised was to develop “equivalence processes” around regulation.

OCC Explores Special Purpose National Bank Charter for FinTech Companies

Dec 07 2016

By Judith E. Rinearson, Anthony R.G. Nolan, Rebecca Laird, and Jeremy M. McLaughlin

On December 2, 2016, the Office of the Comptroller of the Currency (“OCC”) announced its plans to move forward with a proposal to consider applications from financial technology (“FinTech”) companies to receive charters as special purpose national banks. The OCC simultaneously released a white paper detailing the program. The OCC is seeking comments on its proposal, including responses to 13 specific questions listed in the paper. The announcement is potentially significant for the FinTech sector, but questions remain as to whether a special bank charter would represent a fundamental change or merely an incremental enhancement. The comment period ends on January 15, 2017. See our Legal Insight on the proposal here.

UK Department for International Trade announces FinTech mission to Australia

Dec 07 2016

By Jonathan Lawrence

The UK’s Department for International Trade (DIT) has announced its first FinTech mission to Australia taking place in Sydney and Melbourne from 20-23 March 2017.

DIT will select 8-12 UK FinTech companies to participate in the mission to Australia where they will participate in a programme of events and activities. Delegates will spend two days in Sydney, two days in Melbourne and an optional fifth day in Australia or New Zealand. The delegates will meet with and pitch to Australian financial institutions and venture capital firms, visit FinTech hubs, meet the regulator and government ministers, network with the Australian FinTech community, hear from UK FinTech companies that have found success in Australia and schedule meetings with potential customers and partners.

British Consul General in Sydney and Director-General UK Trade & Investment for Australia and New Zealand, Nick McInnes said: “We are very pleased to have the opportunity to bring a group of UK FinTech companies to Australia for the first time and introduce them to the local market. While FinTech in Australia is still in relatively early stages, the industry is growing rapidly and there are many opportunities for UK companies to set up, collaborate and succeed. The FinTech market in Australia is forecast to grow to over AU $4 billion by 2020, of which AU $1 billion will be completely new added value to the Australian economy, so now is an ideal time for UK companies to enter the market”.

For more details, please click here.

The post-election fintech world: are happy days (for bankers) here again?

Dec 05 2016

By Judith Rinearson and Eric Love

In the days following the U.S. federal elections that resulted in the election of Donald Trump as President and Republican control of the 115th Congress, FinTech companies, banks, and other financial institutions are increasingly asking whether they still need to worry about compliance with the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), Consumer Financial Protection Bureau (“CFPB”) regulatory actions, and other financial services regulations.

It is true that there will likely be some significant regulatory changes, but it is a little too early for industry participants to pop the champagne corks.

To see are our thoughts about some of the top issues impacting FinTech companies, banks and other financial institutions, click here.

UK Supreme Court to stream live today on future of Brexit

Dec 05 2016

By Judith Rinearson

The Fintech world is strongly impacted by Brexit, with the ability to access financial markets easily an important factor for disruptors. No doubt they, like many of us, have a keen eye on the speed in which Brexit can occur.

On 3 November 2016, the High Court in the UK ruled that the Prime Minister cannot trigger Article 50 (the notification that triggers the process of the UK leaving the EU) without the leave of Parliament. The decision was appealed, and the Supreme Court (the highest appellate court in the UK) will hear the matter starting today, 5 December. The four days of hearings will be streamed live from the Supreme Court’s website (click here).

There will be eleven justices hearing the matter, which (according to the UK’s non-profit Full Fact organization) will be the largest panel of judges to have heard a single appeal—since the Supreme Court’s predecessor was established in 1876. There are some interesting potential outcomes of this process, including the possibility that the matter will need to be referred to the Court of Justice of the European Union to interpret Article 50.

Please note that even if the Supreme Court sides with the High Court, and decides that the Article 50 notification requires an Act of Parliament, it will still be for Parliament to decide whether or not they want to confirm and continue with the referendum’s Brexit result, or attempt to impose terms on the triggering of Article 50 (which some say is not possible), or reject it altogether. These are interesting times in the UK. We will be watching these developments closely.

European Commission launches Task Force on Financial Technology

Nov 22 2016

By Jonathan Lawrence

On 14 November 2016, the European Commission launched an internal Task Force on Financial Technology (TFFT) that aims to assess and make the most of innovation in the FinTech area, while also developing strategies to address the potential challenges that FinTech poses. The work of this Task Force builds on the European Commission’s goal to develop a comprehensive strategy on FinTech. It appears to take a cautious approach. The launch statement warns that “technological development provides great opportunities for existing financial institutions, alternative service providers and new business models, provided that any risks are carefully managed”. This internal Task Force will bring together the expertise of European Commission staff across several areas, such as financial and digital services, digital innovation and security, and competition and consumer protection. It will also engage with stakeholders and present policy suggestions and recommendations in the first half of 2017.

Commission Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union said:

“we see technological innovation in finance as a development that we need to encourage and enable. It brings huge opportunities for consumers and for industry, both by established players and new Fintech firms. Our Task Force will help us make sure that our policy supports the pursuit of these opportunities, while addressing any risks that may emerge. Efficient financial markets need to make the best possible use of the opportunities that technology presents, while also preserving competition and making sure that new operating systems are safe.”

Commissioner for Digital Economy and Society Günther H. Oettinger said:

“Digital innovation is transforming the entire economy and in particular the financial services sector. It disrupts business models and value chains, leads to the emergence of new players and services. The Digital Single Market strategy aims at laying down an appropriate framework and enabling solutions concerning for instance electronic authentication or cyber-security. Our ambition is to foster financial innovation while preserving financial stability and protecting consumers and investors.”

SEC FinTech Forum Part 1

Nov 22 2016

By Brian Vargo and Tyler Kirk

On November 14, 2016, the U.S. Securities and Exchange Commission held its first forum exclusively focused on the impact of the FinTech movement on the capital markets. Specifically, the forum was organized into four panels addressing automated investment advice, blockchain and distributed ledger technology, crowd funding and marketplace lending, and investor protection. Over the coming weeks we will be posting the key takeaways and implications of each panel.

In her opening remarks, Chair White called for federal agencies to encourage innovation while balancing such encouragement with appropriate investor protections. She noted that the speed and impact of FinTech innovation increases the need for reviewing the sufficiency of regulation. In that spirit, Chair White asked the SEC staff to form a FinTech Working Group to help foster responsible innovation in the capital markets, while exploring the adequacy of the current regulatory framework to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. Commissioner Piwowar said in his remarks that the SEC is uniquely positioned to take the lead regulatory role in the FinTech movement, because many FinTech companies are already registrants and, significantly, the SEC is the only federal agency whose mission includes capital formation. The remarks at the forum indicate that the SEC and industry expect FinTech to play an increasingly important role in the securities industry and that the SEC should continue to engage with industry members in developing regulations that are thorough and forward-looking.

Australian and Kenyan financial regulators sign co-operation agreement

Nov 16 2016

By Jim Bulling and Michelle Chasser

The Australian Securities and Investments Commission (ASIC) and the Capital Markets Authority of Kenya (CMA) have signed a co-operation agreement to share information about innovation in their markets including:

emerging market trends and developments; and
regulatory issues relating to innovation in financial services.

Kenya was an early adopter of FinTech with the launch of mobile phone based payments system M-Pesa back in 2007. It has since become one of the leading FinTech countries in Africa particularly in payments and credit innovations.

FinTech in Canada – Towards Leading the Global Financial Technology Transition

Nov 15 2016

By Robert Zinn and Jim Bulling

The Digital Finance Institute is a prestigious Canadian-based think tank for FinTech established in 2013 with a mandate to address the balance of innovation and regulation; support initiatives for financial inclusion; and advocate for diversity in FinTech. The Digital Finance Institute also promotes FinTech in Canada through conferences and international alliances; the creation of Canada’s national FinTech Awards; the FinTech Cup, the new university FinTech startup challenge and by preparing research papers on FinTech.

Robert Zinn and Jim Bulling contributed insight and content to the U.S. and Australian FinTech ecyosystems.

To read this publication, click here.

Category:FinTech Industry & Regulation