EU Fintech developments
By Jacob Ghanty
In the linked article, Jacob Ghanty discusses some UK and EU regulatory developments affecting the FinTech sector. This article was first published on Thomson Reuters Regulatory Intelligence on 1 April 2016.
FinTechs get ready to play in the sandbox
By Michelle Chasser and Daniel Knight
In a recent speech at the Innovate Finance Global Summit, Christopher Woolard of the UK Financial Conduct Agency (FCA) provided details about the UK regulatory sandbox due to launch 9 May 2016. The sandbox will allow two FinTech cohorts a year to test their ideas without incurring the significant regulatory set up costs usually associated with going to market.
Participants in the sandbox will be given restricted authorisations to provide financial services to allow them to market test their ideas. The FCA will also develop a streamlined application process. Full authorisation will need to be sought to operate outside the sandbox.
Australia and Singapore discussing cooperation agreement
By Jim Bulling and Michelle Chasser
The Australian Securities and Investments Commission (ASIC) and the Monetary Authority of Singapore (MAS) are in discussions to enter into a cooperation agreement to ensure Australian and Singaporean FinTech businesses will not be hindered by regulation when trying to enter the other country’s market.
The agreement is expected to be similar to that entered into between ASIC and the UK Financial Conduct Authority (FCA) in March. Under the ASIC-FCA agreement the two regulators will share information and implement a referral process for FinTech businesses interested in entering the UK or Australian market.
These agreements reflect the increasingly collaborative approach to FinTech regulation internationally.
Further information about the ASIC-FCA agreement can be found in our earlier post here.
What’s next in UK FinTech?
The emergence of blockchain technology and the size of the FinTech industry were the major points of discussion at a recently concluded CBI Insights and KPMG webinar on the future of FinTech.
Blockchain is a data structure that creates a digital ledger of transactions. Using cryptography, blockchain allows participants to securely manipulate the ledger without any central authority. Once the information is entered, it is almost impossible to erase – creating an accurate record of the transaction’s history.
The technology is still in its infancy and currently undergoing significant experimentation. For established financial institutions such as banks, blockchain is seen as a possible solution to the problem of an increasingly complex regulatory landscape. The technology is also seen as an effective tool in combatting money laundering as it tracks a transaction’s entire digital history.
Venture capital investment in blockchain, which had seen a rapid rise over the last several years, is showing signs of plateauing as the technology matures. However, the boom in FinTech investment is expected to continue unabated as companies emerge from their infancy and the adoption of their technology becomes more widespread. In 2015, investments into FinTech were US$14 billion, with major banks such as J.P. Morgan and Goldman Sachs as primary investors. In the UK, Funding Circle, Atom Bank and World Remit each received in excess of US$100 million in funding in 2015. There are now 19 FinTech companies with a market capitalisation in excess of US$1 billion.
Australian and UK financial regulators sign co-operation agreement
By Jim Bulling and Michelle Chasser
The Australian Securities and Investments Commission (ASIC) and the UK Financial Conduct Authority (FCA) have signed a co-operation agreement to promote fintech innovation. The agreement will make expansion into Australian and UK markets easier for growing fintech businesses.
Both ASIC and FCA have already established innovation hubs to assist fintech businesses with their regulatory obligations and encourage development of the industry. A referral mechanism has been created under the new agreement which allows ASIC to refer Australian fintech businesses wanting to enter the UK market to FCA and vice versa. Referred businesses will then receive the same support from the other country’s innovation hub as local businesses.
ASIC and FCA also undertake to share information about emerging market trends and developments, regulatory issues pertaining to innovation in financial services and referred businesses. Shared information will be valuable for developing fintech regulations.
The Financial Stability Board’s fintech priority for 2016
By Jim Bulling and Michelle Chasser
The Chair of the Financial Stability Board (FSB), Mark Carney, has sent a letter to G20 finance ministers and central bank governors outlining the FSB’s priorities for 2016.
One of the five priorities is to assess the implications of fintech innovations and systemic risks that may arise from operational disruptions. The FSB is currently evaluating potential financial stability implications of fintech for the financial system as a whole. The findings of this evaluation will be discussed at the FSB’s March Plenary meeting.
The letter also acknowledged that a number of fintech innovations are now receiving close attention and that the regulatory framework must be able to manage any systemic risks without stifling innovation.
Any decisions made by the FSB following the assessment are likely to have a flow on effect to how G20 members including the US, the UK, Australia and the EU regulate the fintech sector.
The Chair’s letter can be found here.
Asia Pacific Governments increase support for fintech
By Jim Bulling and Michelle Chasser
Following on from the launch of the Fintech Advisory Committee last month, the Australian Treasurer, Scott Morrison, has announced that the Australian Government will provide AU$150,000 to fund fintech hub Stone & Chalk’s Asia Program based in Shanghai. In making the announcement Mr Morrison said “We will support the industry in its objective of making Australia the leading market for fintech innovation and investment in Asia by 2017”.
The Hong Kong Government is also currently laying the foundations for a strong regulatory and financial support system for the fintech sector in Hong Kong.
London Calling: London FinTech Podcast
If you’re interested in the industry view from London, how about listening and subscribing to London FinTech Podcast? It provides access to many of the leaders in the London FinTech space and provides podcasts discussing topics including start up and emerging growth, marketplace lending, crowdfunding, alternative currencies, payment systems, equity funding, invoice finance, investment and the existing financial services response to FinTech innovations.
Australian Government launches FinTech Advisory Committee
By Jim Bulling and Michelle Chasser
The Australian Federal Government is getting behind the Australian FinTech market with the establishment of a FinTech Advisory Committee to help make Australia a FinTech leader in the Asia Pacific region.
I’m in FinTech. Do I Need an Australian Financial Services Licence (AFSL)?
By Jim Bulling and Daniel Knight
For fintech startups looking to operate in Australia, the hurdle of obtaining an AFSL is often daunting. An AFSL application can be expensive and time consuming but it’s rarely necessary to obtain an AFSL from day one. Whether it’s through an exemption, relief or authorisation, there’s usually another way.