Regulators Unveil Plans to Launch Global Financial Innovation Network

On August 7, 2018, the U.K. Financial Conduct Authority (FCA), the Consumer Financial Protection Bureau (CFPB) and 10 other international financial regulators and related organizations announced the launch of the Global Financial Innovation Network (GFIN).  The announcement, which was accompanied by a consultation paper on the role and objectives of the GFIN, serves as part two of a whitepaper published earlier this year by the FCA on the possibility of forming a “global sandbox.”  The GFIN, as proposed, would consist of three components: (i) information sharing and collaboration through a network of regulators; (ii) joint policy work and regulatory trials; and (iii) cross-border firm trials. 

Current GFIN membership includes the following regulators and organizations:
 

• Abu Dhabi Global Market (ADGM, U.A.E.)
• Autorité des marchés financiers (AMF, Canada)
• Australian Securities & Investments Commission (ASIC, Australia)
• Central Bank of Bahrain (CBB, Bahrain)
• Consumer Financial Protection Bureau (CFPB, U.S.)
• Dubai Financial Services Authority (DFSA, U.A.E.)
• Financial Conduct Authority (FCA, U.K.)
• Guernsey Financial Services Commission (GFSC, Guernsey)
• Hong Kong Monetary Authority (HKMA, Hong Kong)
• Monetary Authority of Singapore (MAS, Singapore)
• Ontario Securities Commission (OSC, Canada)
• Consultative Group to Assist the Poor (CGAP, World Bank)

The GFIN hopes to build upon existing information sharing agreements to allow information sharing to take place on a larger and quicker scale, which would allow regulators to fill information gaps related to innovation, technological trends and emerging issues.  This would help FinTech firms navigate international regulations by providing a comprehensive forum through which to interact with multiple regulators.

In addition, the GFIN aims to provide a space to encourage joint policy work and address areas of divergence between financial services regulators, particularly with respect to emerging technologies and legacy business models and regulatory frameworks.  

As envisioned, the GFIN would also facilitate cross-border trials of emerging technologies across global jurisdictions.

The GFIN invites feedback on a set of 10 questions presented in the consultation paper, including the proposed mission statement, functions, priorities and potential challenges with respect to implementation.  All feedback is to be submitted to the working group no later than October 14, 2018.

The CFPB is the United States’ representative in the initiative.  It will be interesting to monitor what effect, if any, membership in the GFIN may have on the CFPB’s plans to launch its own domestic regulatory sandbox, and whether the CFPB’s inclusion in the network will encourage other states to join Arizona in enacting regulatory sandboxes of their own.  While there remains much to be done before the GFIN becomes operational, the proposal nonetheless demonstrates that global regulators are working collaboratively to reduce barriers for FinTech firms and integrate them into the global financial regulatory framework.