The Australian Securities & Investments Commission (ASIC) released a consultation paper on Wednesday that explores the idea of introducing a regulatory sandbox exemption, among other measures designed to facilitate financial innovation.
The regulatory sandbox would allow new financial technology (fintech) businesses and other firms to experiment with innovative ideas in the financial sector. The proposals aim to address the regulator’s concerns about existing barriers to entry, including the long time it takes getting to market, and meeting the organizational competence requirements at startup firms.
In an effort to deal with these issues, the proposals include a possible registration exemption to allow start-ups to test certain financial services for six months (known as a regulatory sandbox exemption).
The consultation paper also proposes amending the rules to allow certain heavily-automated businesses to rely, in part, on sign-off from a third party to meet their competence requirements, and sets out how the ASIC exercises discretion to evaluate the competence of an aspiring registrant.
“ASIC is committed to facilitating innovation in financial services, especially where it has the potential to improve consumer outcomes. We are looking forward to engaging with industry on the proposed measures,” says John Price, ASIC commissioner, in a statement..
“We believe the measures proposed in this consultation paper will help to lower barriers to entry faced by fintech start-ups by providing cost reductions and promoting efficiency in the provision of financial services whilst maintaining the fundamental principles of the regulatory and licensing framework,” Price adds.
The proposals are out for comment until July 22.