FinTech Law Watch

At the Crossroads of Law, Innovation and Commerce

 

1
We know about FinTech, but what’s RegTech?
2
A New Cyber Regulator on the Beat: The CFPB Issues its First Cybersecurity Order and Fine
3
Islamic Finance and FinTech
4
FinTech in the UK: Regulating Disruption
5
Payment Services and Money Transfer in the FinTech Space: What is Next?
6
London Calling: London FinTech Podcast
7
Fintech investment in the UK – a $901m business
8
Certain Compliance Risks in Marketplace/Peer-to-Peer/Online Lending
9
K&L Gates to Sponsor ABS Vegas 2016 Conference
10
ASX looking to replace CHESS with blockchain

We know about FinTech, but what’s RegTech?

By Jacob Ghanty

The UK Government announced in last year’s budget its commitment to the early adoption of new technologies to support FinTech companies to meet the greater reporting requirements and higher regulatory standards imposed by the UK regulators, notably the Financial Conduct Authority (“FCA”).  The name given to these technologies is “RegTech”.   RegTech is part of a wider project launched by the Government to enable the UK to capitalise on the development of new financial business models and disruptive innovation and become the world’s leading FinTech hub.  In November 2015, the FCA published a call for input on how it should progress its RegTech work.

The FCA’s RegTech focus sits alongside its efforts to increase innovation in financial services more broadly under its “Project Innovate” initiative and its development of a “Regulatory Sandbox” for businesses to test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences of pilot activities.  In its call for input on RegTech, the FCA identified some early emerging themes that it considers worth exploring further with the FinTech community.  Of particular interest is the proposal that real-time and ‘system embedded’ compliance and risk evaluation tools be developed for financial institutions.  Other areas highlighted by the FCA as relevant to this space are: technology accelerators, big data techniques, visualisation and robo tools, software integration tools and cloud technologies.

Firms in the UK FinTech space are advised to follow RegTech developments as they are likely to have a significant impact on the interaction between businesses and regulators.

A New Cyber Regulator on the Beat: The CFPB Issues its First Cybersecurity Order and Fine

By Ted Kornobis

On March 2, 2016, the Consumer Financial Protection Bureau (“CFPB”) instituted its first data security enforcement action, in the form of a consent order against online payment platform Dwolla, Inc.

The CFPB joins several other regulators that have recently issued statements or instituted enforcement actions in this space, including the Securities and Exchange Commission (“SEC”), Commodities Futures Trading Commission (“CFTC”), the Financial Industry Regulatory Authority (“FINRA”), the National Futures Association (“NFA”), the Department of Justice (“DOJ”), state attorneys general, and the Federal Trade Commission (“FTC”), which has been active in this area for several years.

To read more click here.

Islamic Finance and FinTech

By Jonathan Lawrence

FinTech and Islamic finance techniques are both disrupting traditional structures in the conventional financial industry. Therefore it is appropriate that companies, investors and consumers aiming to be Islamic-compliant are able to use technology to increase access to financing structures that accord with their beliefs or those of their markets in the Muslim and non-Muslin worlds.

Mobile based Islamic-compliant banking is on the rise, especially among those who were previously unbanked for logistical or religious reasons. Among the most prominent disruptive ventures in Islamic finance is Dubai-based Beehive, a platform that aims to provide low-cost alternative financing to small and medium-sized enterprises (SMEs) and is the first peer-to-peer lending platform in the world to have received independent Shariah certification for its investments. Beehive has so far provided more than $4bn in financing for SMEs in the United Arab Emirates.

Read More

FinTech in the UK: Regulating Disruption

By Sonia Gioseffi, Shehram Khattak, Jonathan Lawrence and Ronnie Yearwood

Without doubt, FinTech companies are in some ways deconstructing the services offered by larger banks in the UK and elsewhere. However, risks are not resolved because of the technology, as information and financial products are marketed and sold via web-based platforms, social media or other technological applications. Consumers still need to be clearly informed about the firms and the financial products being offered. Firms must still ensure that they adhere to the principle that their communications are “fair, clear and not misleading”. It is, therefore, better for a FinTech firm to apply and take advice on best practice in this regard, which saves money and time in the interim, than to wait either for enforcement from the regulator or for market failure to drive responses. Find our longer article here.

Payment Services and Money Transfer in the FinTech Space: What is Next?

By Jacob Ghanty and Tom Wallace

On 23 February 2016 our London office hosted a seminar discussing the future of payments and money transfer and the opportunities and challenges for businesses in this space, featuring talks from leading industry experts Anthony Watson of Uphold Inc. and Jean-Stéphane Gourévitch of Matchi.biz, alongside our partners Jacob Ghanty and Tom Wallace. Find a link to the audio recording and slides of the event here.

London Calling: London FinTech Podcast

By Jonathan Lawrence

If you’re interested in the industry view from London, how about listening and subscribing to London FinTech Podcast? It provides access to many of the leaders in the London FinTech space and provides podcasts discussing topics including start up and emerging growth, marketplace lending, crowdfunding, alternative currencies, payment systems, equity funding, invoice finance, investment and the existing financial services response to FinTech innovations.

Fintech investment in the UK – a $901m business

By Cameron Abbott and May Giuliani

Investment in fintech systems is becoming increasingly popular globally, but no more so than it is in the UK. Deal volumes in the UK have been growing at 74% per year since 2008 (compared with 27% globally). This digital disruption marks the most major period of change for financial services companies in decades.

According to recent data, the UK alone accounted for $901 million of the $12.5 billion invested in fintech worldwide last year. Five other European nations combined for $1.1 billion. This huge investment in the UK included two of the top 20 fintech deals in the world – Challenger Bank Atom raised $125 million, and peer-to-peer lending platform Funding Circle raised $150 million. Over 60% of fintech venture capital investment investments in 2015 were made into alternative finance and payment services such as Funding Circle, Currency Cloud and Transferwise.

See here for The 2015 Fintech Investment Landscape, February 2016.

Certain Compliance Risks in Marketplace/Peer-to-Peer/Online Lending

By Tony Nolan, Joseph Valenti, and Christopher Bell

The online marketplace lending industry has experienced substantial growth in the past few years.  Its share of the global lending market is predicted to continue its increase.  In the United States, regulators are starting to take notice.

The first major sign of interest came from the U.S. Treasury.  On July 16, 2015, it issued a Request For Information to better understand the impact of online marketplace lending on small businesses, consumers, and the broader economy.

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K&L Gates to Sponsor ABS Vegas 2016 Conference

By Tony Nolan

Once again K&L Gates will be sponsoring the IMN ABS Vegas 2016 conference, which will take place at the Aria Resort & Casino in Las Vegas Nevada from February 28 through March 2, 2016.

This is the first year that online lending will be an important focus of attention at ABS Vegas, in testament to the growth of an important new asset class.  This will permit K&L Gates to highlight our practice in the converging areas of Fintech, Marketplace Lending, Securitization and Structured Finance and Consumer Financial Services Regulation

Visit our exhibition booth and get cool stuff!

ASX looking to replace CHESS with blockchain

By Jim Bulling and Michelle Chasser

The Australian stock exchange ASX has announced that it has partnered with a US-based firm to develop distributed ledger technology, more commonly referred to as blockchain. The ASX is planning to develop the ledger technology for post-trade services such as clearing and settlement of the cash equities market. Unlike the bitcoin blockchain which operates as a public ledger, the ASX will use a private network which will only allow parties with permission from the ASX to participate.

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