Funds

Buckets and spades at the ready and off we go ….

Global Financial Innovation Network

The Global Financial Innovation Network (GFIN)  announced by the FCA in August 2018 was formally launched in January 2019. The GFIN is a network of 29 regulators and other organisations committed to supporting financial innovation whilst ensuring that it works in the interests of consumers.

GFIN’s primary objective to provide a more efficient way for innovative firms to interact with regulators across jurisdictions.  It aims to help them navigate between countries as they look to scale new ideas. It also seeks to create a new framework for co-operation between financial services regulators on innovation related topics by sharing different experiences and approaches.

Global Sandbox now open for first cohort

One key plank of the GFIN platform will be a global “sandbox” – essentially a pilot for firms wishing to test innovative products, services or business models across more than one jurisdiction.

The GFIN has now announced the opening of a 1-month application period for a pilot phase of cross-border testing. Interested firms should submit applications to relevant participating regulators by 28 February 2019. Pilot tests are expected to run for a 6-month period, unless regulators agree to extend them.  FCA  expects  that the pilot will run from Q2 2019.

What applicants need to know

Firms wishing to participate in this pilot phase must:

  • first check which particular regulator is the relevant authority for the proposed activity in each jurisdiction and confirm whether it is a participating regulator;
  • submit a separate application to each regulator firms wish to test with. ( GFIN members will then coordinate with each other around the application);
  • show they meet the application and eligibility requirements of each of the jurisdictions in which they would like to test.  For example,  the UK FCA eligibility criteria look for participating firms to demonstrate:
    • genuine innovation, with research showing a new or a significantly different offering
    • consumer benefit, (either directly or via heightened competition)
    • work done to identify possible consumer risks and proposed mitigation
    • why they need a sandbox testing (such as where the innovation does not easily fit the existing regulatory framework)
    • they are ready for testing with real consumers, have a well-developed testing plan with clear objectives, parameters and success criteria and safeguards in place to protect consumers and provide appropriate redress if required

Commenting on their expectations for the first global sandbox cohort FCA noted that:

“This pilot is as much a trial for GFIN members as it will be for firms. We are looking for firms who can be flexible and agile in their participation, and can provide GFIN regulators with feedback on their experience. Firms will benefit from the opportunity to test and compete in the regulated space, and their tests will help inform the future work of the network.”

Karen Fountain

Partner at Brodies LLP
Karen is a partner at Brodies in the corporate team. She has over 20 years' experience of advising leading financial institutions, funds and intuitional and strategic investors across the globe with a broad range of matters.
Karen Fountain