OSC and AMF Join Global Financial Innovation Network
On August 7, 2018, the U.K. Financial Conduct Authority (“FCA”) announced the formation of the Global Financial Innovation Network (“GFIN”), comprised of 11 financial regulators, including the Ontario Securities Commission (“OSC”) and Autorité des marchés financiers (“AMF”).
GFIN follows upon a white paper published by the FCA in February 2018, which suggested the creation of a “global sandbox” to enhance regulators’ ability to collaborate on innovation-related topics. It is also intended that the GFIN will provide innovative firms with greater efficiencies in their interactions with regulators. The announcement was accompanied by the publication of a GFIN Consultation Document, which proposes three complementary functions for the GFIN:
- Network of regulators – GFIN would act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models. The network would act as a forum to facilitate improved collaboration and information sharing, benefitting each member by providing access to a wider range of regulatory perspectives and experiences. It is proposed that the network will be overseen by a steering group comprised of a portion of its members and would contain various sub-groups that could focus on particular topics.
- Collaboration on policy formulation – GFIN would provide a forum for joint regulatory policy discussions, with a view towards supporting the work of standard setting bodies and facilitating closer policy dialogue and knowledge sharing, thereby reducing the potential for regulatory arbitrage. GFIN intends that it become the forum for future policy discussions between regulators, industry, academia and other relevant stakeholders. Anti-money laundering (“AML”), counter-terrorist financing (“CTF”), payments and cross-border identity verification are seen as examples of issues that could benefit from a common approach across jurisdictions.
- Collaboration on cross-border regulatory trials – GFIN would provide innovative firms with an environment in which to trial cross-border solutions and navigate multi-jurisdictional regulatory issues, in the B2B and B2C spaces. It is hoped that GFIN would provide a global platform that would allow firms to trial new ideas with consumers or other market participants, working with the regulatory authorities across participating jurisdictions.
The GFIN arises out of the participating regulators’ observation that, increasingly, emerging innovation trends in matters such as big data, artificial intelligence and blockchain based solutions are global, rather than domestic, in nature. In forming the GFIN, the members reconsidering existing ways of working and collaborating, with a view towards balancing the potential benefits of innovation with conventional regulatory policy objectives, such as financial stability, integrity, financial inclusion, competition and consumer protection.
In addition to the FCA, OSC and AMF, the other founding members of GFIN are:
- Abu Dhabi Global Market
- Australian Securities & Investments Commission
- Central Bank of Bahrain
- Consumer Financial Protection Bureau (USA)
- Dubai Financial Services Authority
- Guernsey Financial Services Commission
- Hong Kong Monetary Authority
- Monetary Authority of Singapore
- Consultative Group to Assist the Poor
The GFIN is designed to be self-sustaining and independent, with members expected to contribute the staff resources necessary to meet the GFIN’s objectives. The GFIN is not expected to replace or duplicate the role of financial services standard setting bodies in monitoring emerging innovation trends, and is not expected to be a regulatory body with rulemaking powers.
Although GFIN is at an early stage, the OSC, AMF and other Canadian securities regulators have a long and successful history of working collaboratively with regulators in other jurisdictions in a manner that balances business imperatives with regulatory policy objectives. Participation in GFIN shows again that the OSC and AMF are cognizant of the increasing intersection of Fintech innovation and the animating principles of securities regulation.
The GFIN Consultation Paper poses 10 questions for public comment. GFIN members are asking for feedback on the consultation questions by October 14, 2018. In addition, interested parties are encouraged to directly contact representatives of the GFIN members who are identified in the GFIN Consultation Paper.
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