The Financial Conduct Authority (FCA) is consulting on the creation of a global sandbox network, to coordinate financial firms’ trialling of products across jurisdictions.
The Global Financial Innovation Network (GFIN) is being devised in collaboration with 11 other international regulators, from jurisdictions including Canada, the USA, Australia, France, Hong Kong and the Gulf states.
GFIN would involve the creation of a forum to exchange experiences in each market, possibly leading to joint policy planning, and aims to provide firms with regulatory transparency for cross-border product trials.
The regulators are also seeking to devise a common approach in the fight against fight money laundering, terrorist financing and identity fraud in emerging financial services products.
“The major emerging innovation trends within financial services are increasingly global, rather than domestic, in nature,” the FCA said. “For instance, big data, artificial intelligence, and blockchain based solutions are being developed and deployed simultaneously in different financial markets.”
It added: “The network will seek to provide a more efficient way for innovative organisations to interact with regulators, helping them navigate between jurisdictions as they consider and look to scale new ideas.”
The FCA said the composition of participating regulators might change in the future, with a smaller number of entities taking up membership in the final network and new ones joining on the way.
Some of the initial responses to the consultation suggested that firms that successfully apply for a sandbox licence in one country could automatically gain “passporting” rights to extend their trials to other jurisdiction – potentially lessening any future blow to the British fintech market should the UK leave the EU without a deal in March 2019.
The FCA did not exclude the possibility of “passporting”, but warned it would require “regulatory convergence” and would likely be a long-term project.
The British watchdog has been among the most active of national regulators in providing “sandbox” spaces for fintechs, while at the same time scrutinising how technologies such as machine learning are being implemented in credit underwriting.