Australia’s financial regulator has joined 11 other watchdogs from around the world in proposing a new Global Financial Innovation Network (GIFN) to help regulators cope with the rapid rate of technological change in the sector.
The Australian Securities and Investments Commission (ASIC) says the new collaborative body would create a "global sandbox" for regtech, fintech and suptech solutions to be tested across international markets so that regulators and firms can stay on the pace emerging trends.
The bold push comes as regulators around the world struggle to stay on top of the increasing speed of developments ranging from coin offerings to real time payments and settlement.
Of particular concern is the impact of technology phenomena like blockchain, big data and artificial intelligence, especially how they are being regulated and implemented differently across jurisdictions.
With the global financial system largely dependent on a series of global, interoperable standards, the risk of regulatory failure increases largely in line with how far watchdogs are behind products and technologies in the market.
The idea for a global sandbox was initially floated by the UK Financial Conduct Authority in February this year.
ASIC claims there is "sufficient merit" to continue exploring the idea, given that international regulators are independently attempting to deal with the slew new business models, services and products on offer, even though they often have cross-border impacts.
The GIFN consultation paper [pdf] released on Wednesday states the network could have three main functions:
- act as a network of regulators to collaborate, sharing experience and best practice, and communicate to firms
- provide a forum for joint policy work
- provide firms with an environment in which to trial cross-border solutions in both B2B and B2C sectors
Commissioner John Price said in a statement that the sandbox will be an important tool for authorities to harness the benefits of fintech and regtech solutions while also mitigating potential harms.
"There is great potential through a group like the GFIN to help share the experiences and knowledge from across different markets, while also providing a platform for innovative firms wishing to scale their propositions via testing in multiple countries," said Price.
Submissions to the GIFN working group will be open until 14th October.