Fintech regulatory sandboxes are the way forward

It’s welcome news that Hong Kong’s Securities and Futures Commission (SFC) has launched a fintech regulatory sandbox

The sandbox will allow companies perform regulatory activities using fintech.

Let’s hope more international originations will follow suit and launch more fintech sandboxes to encourage technology innovation.

In order to be eligible for the SFC Regulatory Sandbox, firms should be licensed corporations or startups intending to conduct regulated activities.

The eligibility criteria also require firms to be fit and proper, use innovative technologies, offer products and services of high quality for investors, deploy adequate investor protection measures, and display a serious commitment to conduct regulated activities through fintech so as to benefit the Hong Kong financial services industry.

To ensure minimal risk to the investors, eligible firms will be imposed licensing conditions that may include limiting the types of clients served by the firm or the maximum client exposure.

The regulator will closely supervise firms entering the sandbox and collaborate with them to help them identify risks and refine their business models.

Fintech and wealth management innovation needs the support of regulatory bodies, the private sector and the financial services sector to grow and flourish. Let’s have more fintech sandboxes, and more experimentation because this will encourage a culture where people dare to innovate in fintech.