This article was written by Jasmin Dhillon who is a financial services and commercial/corporate lawyer at Sophie Grace Legal & Compliance. Jasmin is passionate about innovation, financial services and all things FinTech.
The Australian Securities and Investments Commission (ASIC) is talking to the Monetary Authority of Singapore (MAS) about an agreement to ensure that regulation does not hinder the progress of start-ups looking to operate in both countries.
Fintech regulation is a key priority of top financial regulators across the globe. Discussions between ASIC and MAS are at an early stage, however it is believed that the regulators are enthusiastic about striking a deal. The deal is likely to mirror the deal struck between the UK’s Financial Conduct Authority (FCA) and ASIC in March.
In June 2015, Ravi Menon, head of MAS, was the first to suggest “innovation in a sandbox” as an approach for innovation in financial services. However MAS has not yet implemented its sandbox and has been surpassed by the FCA which is launching its sandbox this spring and will start accepting testing proposals for its regulatory sandbox from 9 May.
MAS’ concept of the sandbox has been one with minimal regulator involvement, which is a point of difference with its counterparts, the FCA and ASIC. MAS suggested that financial institutions themselves should “adopt a sandbox” approach to launch their innovative products or services within controlled boundaries.
The MAS concept is one where MAS does not appear to control the sandboxes at all but essentially frees the financial institutions (incumbents or challengers) to experiment. Financial institutions and other market participants would establish sandboxes as needed for specific institutions and other market participants would establish sandboxes as needed for specific use cases and ecosystems.
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It remains to be seen if MAS changes its approach and if other regulators will follow the FCA’s approach after it becomes the first financial regulator to implement its sandbox.
Fintech regulation was a key topic of discussion at the recent meetings of both the International Organisation of Securities Commission (IOSCO) and the Financial Stability Board. Both flagged fintech as a key priority warranting a co-ordinated multilateral response, an approach also advised by ASIC chairman Greg Medcraft in a recent statement.
It is likely that we will see closer collaboration on fintech regulation between Australia, the UK, Singapore, and potentially other jurisdictions in Asia such as Japan and Hong Kong as top financial regulators work to assess the impact fintech could have on global markets and financial stability.
There is especially a need for regulators to work together to ensure fintech companies and their technology systems become more resilient to both cyber-attacks and traditional outages in order to enhance consumer protection.