MANAMA: The Central Bank of Bahrain (CBB) has announced it is partnering with the Financial Conduct Authority (FCA) and 11 other organisations for the creation of the Global Financial Innovation Network (GFIN).
The move builds on the FCA’s proposal in February this year to create a “global sandbox”.
The network will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas.
It will also create a new framework for co-operation between financial services regulators on innovation related topics, sharing different experiences and approaches.
The collaborative effort, involving regulators from around the world, is also now launching a consultation on the role the GFIN should play in delivering its objectives, including the tools it will use.
The consultation sets out the three main functions of the GFIN:
– act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models;
– provide a forum for joint policy work and discussions; and
– provide firms with an environment in which to trial cross-border solutions.
As part of the consultation, the group is seeking views on the mission statement for the GFIN, its proposed functions, and where it should prioritise activity.
The group is also keen to hear from other interested regulators or related organisations who wish to get involved.
CBB Governor Rasheed Al Maraj said the CBB’s participation in the GFIN reinforces the strategy to encourage innovation in the financial services industry by developing the appropriate regulatory framework in line with international best standards, and by fostering a supportive ecosystem.
According to Mr Al Maraj the ultimate aim is to create a more efficient financial services sector to solidify Bahrain’s position as a leading financial hub in the region.
He praised the successful experience of the CBB with its own regulatory sandbox since its launch in mid-2017, which attracted many companies that are involved in testing innovative financial solutions.
He also added, “through its participation in GFIN, the CBB will seek to enhance co-operation with leading global financial centres to drive economic growth.”
Fifty responses were received to the earlier paper and were positive about the idea of regulators collaborating on this topic.
Key themes to emerge in the feedback were:
Regulatory co-operation: Respondents were supportive of the idea of the initiative providing a setting for regulators to collaborate on common challenges or policy questions firms face in different jurisdictions;
Speed to market: Respondents cited one of the main advantages for the global sandbox could be reducing the time it takes to bring ideas to new international markets;
Governance: Feedback highlighted the importance of the project being transparent and fair to those potential firms wishing to apply for cross-border testing;
Emerging technologies/business models: A wide range of topics and subject matters were highlighted in the feedback, particularly those with notable cross-border application.
Among issues highlighted were artificial intelligence, distributed ledger technology, data protection, regulation of securities and initial coin offerings, know your customer and anti-money laundering.
The CBB is asking for feedback on the consultation questions by October 14, 2018, whereby, the consultation paper shall be available on the CBB website (www.cbb.gov.bh) under the “open consultations” section.
The FCA is a financial regulatory body in the UK, but operates independently of the UK government, and is financed by charging fees to members of the financial services industry.
Besides FCA and the CBB, the other organisations involved in the GFIN are: Abu Dhabi Global Markets; Autorité des marchés financiers (Québec); Australian Securities & Investments Commission; US Consumer Financial Protection Bureau; Dubai Financial Services Authority; Guernsey Financial Services Commission; Hong Kong Monetary Authority; Monetary Authority of Singapore; Ontario Securities Commission; and Consultative Group to Assist the Poor.