In a move that is targeted at promoting Singapore as a leading FinTech hub in Asia-Pacific, the Monetary Authority of Singapore (MAS), the regulatory authority overseeing financial matters in Singapore, issued a consultation paper on 6 June 2016 which outlined a proposal for a “regulatory sandbox” for FinTech solutions.
The proposal will permit financial institutions and other entities to experiment with new FinTech solutions in an environment of relaxed regulation whilst maintaining appropriate safeguards. It is hoped that this proposed relaxed regulatory environment will allow such solutions to take root without being impeded by regulatory compliance costs and will improve the viability of innovations in the FinTech sector.
MAS has proposed that applications for FinTech solutions to be tested in the regulatory sandbox will be assessed by MAS on criteria such as: the innovativeness of the solution, whether the applicant has the intention and ability to deploy the solution in Singapore on a broader scale and whether the solution is beneficial to consumers and/or the industry.
MAS has said that this sandbox will allow experimentation in an environment where actual products or services are offered to a limited number of customers but within a safe and well-defined space. However, the sandbox will not be “one size fits all”. Instead, individual sandboxes will be tailored to each applicant with MAS determining which specific regulations to relax and which to retain on a case-by-case basis. It will therefore be important for each applicant to understand the details of how its regulatory sandbox will work. Much will depend on the nature of the evaluation criteria and the boundary conditions to be put in place by MAS.
Although very much a work in progress, this move by the MAS is innovative and designed to meet the objective of defining Singapore as a leading financial hub in Asia.
Responses to this consultation must be submitted by 8 July 2016. A copy of the consultation paper can be found on the MAS website here.