FCA invites views on cross-sectoral sandbox

Maria Nikolova

The emergence of the ‘hyper platform’ model, such as that adopted by Alibaba, has been among the factors that prompted UK regulators to consider the concept of a cross-sectoral sandbox.

The UK Financial Conduct Authority (FCA) has earlier today published Call for Input, asking for opinions about the concept of a cross-sectoral sandbox.

The Call for Input will be of interest to a very wide range of firms, regulators and consumers, including FCA-regulated firms that (plan to) use emerging technologies to facilitate business models spanning at least one other regulator, firms that consider diversifying their business model into the financial services sector, as well as consumers, Think Tanks, governmental bodies, and policy makers.

The starting point for the concept of a cross-sectoral sandbox is that this is a single-point-of-entry sandbox for firms to test innovative propositions with multiple UK regulators, in a controlled environment.

It is set to allow regulators to work together in a practical way to gain a shared understanding of new technologies, and provide insights on emerging trends in different markets. Such a sandbox might also allow firms to more easily engage with relevant regulators to improve confidence that their concepts are compliant in different regulatory contexts. This could involve live testing of new products in a controlled environment with simultaneous oversight from multiple regulators.

A cross-sector sandbox could also help with new, complex business models. In China for instance, the ‘hyper platform’ model has emerged thanks to entities like Alibaba group. The latter conducts activity from social commerce platforms, retail and wholesale marketplaces, marketing technology, cloud computing, logistics and financial services (Ant Financial). Other examples include Tencent and Baidu.

A cross-sector sandbox may also support those firms looking to diversify into a new sector.

While a cross-sector sandbox presents its own challenges, the FCA stresses that its experience suggests that there are opportunities to be leveraged especially as technology developments such as the internet of things, big data, and artificial intelligence affect multiple sectors. The regulator believes these developments will result in an increasing number of propositions that could benefit from cross-sectoral testing, and where different regulators would benefit from observing and overseeing these tests. This would also help to ensure that these innovative propositions get to market in a manner which protects consumers and promotes competition across markets.

The FCA is inviting views on this concept, with feedback expected until August 30, 2019. 

Read this next

Retail FX

Italian watchdog red flags Olympus Brokers, UnicoFX and Allfina Group

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

XTB revenues hits zł1.45 billion in 2022, Q4 earnings disappoint

Poland-based Forex and CFDs broker, XTB has reported its final results for Q4 of 2022 and the full fiscal year ending on December 31, 2022, showing one of its most successful corporate years.

Executive Moves

Lirunex Limited recruits Waleed Salah as head of MENA sales

Maldives-based brokerage firm Lirunex Limited has secured the services of Waleed Salah, who joined the company in the role of its head of sales for the MENA region.

Executive Moves

Trading 212 parts ways with co-founder Borislav Nedialkov

Trading 212 has a void to fill at its FCA-regulated business in London, following the departure of two key players, Raj Somal and Borislav Nedialkov.

Digital Assets

Binance acquires troubled crypto exchange GOPAX

Binance, the world’s largest digital asset trading platform, has reportedly acquired a majority stake in the troubled South Korea-based cryptocurrency exchange GOPAX.

Digital Assets

Kraken exits Middle East, closes UAE office

Digital currency exchange Kraken will close down its operations in Abu Dhabi, UAE and lay off the majority of its team focused on the Middle East and North Africa.

Industry News

CFTC comments on ION Cleared Derivatives issues after Russian-linked hack

“The ongoing issue is impacting some clearing members’ ability to provide the CFTC with timely and accurate data. As this incident unfolded, it became clear that the submission of data that is required by registrants will be delayed until the trading issues are resolved.”

Industry News

FCA took down 14 times more misleading ads in 2022 thanks to technology

The FCA has made significant improvements to the digital tools it uses to find problem firms and misleading adverts. These improvements have enabled it to work through a much larger number of cases compared with 2021.

Executive Moves

HKEX appoints ex-Goldman Sachs Matthew Cheong to lead platform’s focus on derivatives

“He has worked for a number of the world’s leading investment banks and his experience will be invaluable to HKEX as we continue to enhance our derivatives product offerings and build on our innovative and robust platform business, connecting capital with opportunities.”

<