The Financial Conduct Authority (FCA) and the Financial Services Agency of Japan (JFSA) today announced an ‘Exchange of Letters’ to establish a regulatory referral system about fintech firms, dubbed ‘Innovator Businesses’, in their respective markets, while working to reduce barriers to entry all around.
Under the agreement, the FCA and JFSA, which oversees Japan’s banking, securities and exchange industries, will refer to each other’s innovator businesses that would like to operate in the other authority’s jurisdiction. Upon a referral being received, the FCA or JFSA 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.
This Exchange of Letters will make it easier for both the UK and Japan to invest in fintech, as well as for their fintech firms to scale up internationally. Both countries will seek the ability to access each other’s fintech firms and to facilitate expansion into each other’s markets.
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In addition, the co-operation framework will enable the regulators to share information about financial services innovations, reduce barriers to entry in a new jurisdiction and further encourage innovation in both countries. The FCA previously inked similar agreements with several emerging fintech hubs in Asia such as Singapore and Korea.
The agreement also laid out the terms to establish the agenda for an ongoing dialogue between the two agencies which may be extended to further issues in the future.
Shunsuke Shirakawa, the Vice Commissioner for International Affairs at the JFSA, said: “We are delighted to establish this Co-operation Framework with the FCA. This is our first case in creating a pro-FinTech Co-operation Framework with any other countries. UK is one of the world-leading FinTech countries, generating £6.6 billion in revenue. We believe that this Exchange of Letters strengthens the relationship between the JFSA and the FCA and promotes innovation in our respective markets.”
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, added: “We are committed to encouraging innovation that has the potential to be of benefit to consumers using financial services here in the UK. Today’s Exchange of Letters with the JFSA will help break down barriers to entry both in Japan and in the UK for firms with interesting new business services and products.”