Global Financial Innovation Network Releases One Year On Report
On June 25, 2019, the Global Financial Innovation Network (“GFiN”) published a report reflecting on its activity over the past year entitled “GFiN - One Year On”. GFiN is a network of international regulators and various other stakeholders created with a view to improving efficiency in the way innovative firms interact with regulators, as well as providing these firms with a means of navigating internationally, scaling up and testing new ideas. GFiN’s focus is on collaboration, co-operation and knowledge-sharing between financial services regulators. GFiN also seeks to facilitate cross border experimentation. At the time of the report, GFiN consisted of 35 Members and 7 observers. Canadian regulators that are currently members of GFiN are the British Columbia Securities Commission, the Alberta Securities Commission, the Ontario Securities Commission and the Autorité des marchés financiers.
The One Year On report reflected on the following key points:
- A Timeline of Key GFiN Activities Since Inception – GFiN followed up on a white paper published by the U.K. Financial Conduct Authority suggesting the creation of a “global sandbox” to assist regulators in adapting to the pace of technological innovation and change. In August, 2018 GFiN was created. GFiN’s creation was accompanied by a Consultation proposing three workstreams (for more information on GFiN’s Consultation, see McCarthy Tétrault’s August, 2018 insight). GFiN held its first meeting in October, 2018 to consider feedback received on its Consultation. In its October 2018 meeting, GFiN also sought to establish its governance, membership and workstream models. In January, 2019, GFiN officially launched and issued its Terms of Reference and also agreed upon its governance structure. In 2019, GFiN further made efforts to launch a cross-border testing pilot, detailed further below. GFiN held its first annual meeting in London in May of 2019.
- Feedback to Consultation Paper – GFiN’s August, 2018 Consultation Paper received feedback requesting further clarity on GFiN’s work programme and the challenges facing innovative firms. Further feedback demonstrated a desire to improve the regulator-regulated dialogue and highlighted some of the challenges in innovating and scaling up on a cross-border basis. Additionally, feedback supported focusing on RegTech trials and collaboration. GFiN’s founding members met to discuss the feedback and response to suggestions in its October, 2018 meeting.
- Clarity on GFiN’s Role – GFiN articulated that its role is neither to replicate any global standard setting body nor to create harmonized regulatory standards across jurisdictions. GFiN stated that it seeks to build on and complement the work that global standard setting bodies have undertaken through targeted engagement. Additionally, GFiN seeks to provide a forum for regulators to interact and facilitate discussion, while giving innovative firms an avenue for cross-border testing.
- Development of GFiN Governance and Workstreams – GFiN will be overseen by a Coordination Group and underpinned by various workstreams. Workstreams will consist of Members (national financial sector regulators and/or supervisors), Observers (non-regulator GFiN participants) and Other Stakeholders. Other Stakeholders cannot join any of the workstreams but may have the opportunity to provide input. The Coordination Group designates a Group Member to lead each workstream. Workstream participation is voluntary for Members. Current workstreams are:
- Collaboration Workstream – seeks the best way to enable regulators to collaborate and share experiences of innovation, while providing a forum to discuss lessons learned and provide regulatory approaches to innovation.
- Cross-border Testing Workstream – seeks to run cross-border testing of innovative products and services.
- RegTech & Lessons Learned Workstream – focused on sharing RegTech knowledge and collaboration on areas of mutual interest.
- Cross-border Pilot Launch – GFiN has selected eight firms to assist in testing on a cross-border basis. GFiN is currently collaborating with the selected firms to develop a testing plan. Firms that develop a suitable testing plan will take part in the pilot testing. GFiN will make available more information on the pilot testing, including details about its progress, over the course of the pilot. Currently, GFiN has highlighted the need for a standardized assessment process for testing. From its pilot development, GFiN has noted a heightened demand for cross-border testing from both regulated and unregulated markets.
- Learning Points and Next Steps – GFiN also reflected on the growth of its knowledge base over the past year, its promptness in enabling cross-border testing, as well as its development of a network of regulators. GFiN acknowledges that future challenges will include understanding and working with data privacy and data sharing in an inter-jurisdictional environment. Going forward, GFiN will meet twice a year (meeting next in Montreal in October, 2019). Additionally GFiN will focus on the formalization of its cross-border testing, using the pilot results as a basis for this formalization. GFiN is also working with its RegTech workstream to develop a basis for supervisory and compliance-based technologies. GFiN also identified that it is keen to keep an open dialogue with stakeholders and allow existing Members to propose and participate in new workstreams.
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