The Australian Securities and Investments Commission (ASIC) is introducing the first-ever registration exemption for financial technology (fintech) firms that will allow eligible, fledgling fintech businesses to test their services with a limited number of retail investors without holding a licence.
“ASIC’s ‘fintech licensing exemption’ is unique,” says ASIC commissioner John Price in a statement. “No other major jurisdiction has implemented a class waiver that allows eligible businesses to notify the regulator and then commence testing without an individual application process.”
The new exemption will allow eligible businesses to test specified services for up to 12 months with up to 100 retail clients, provided they also meet certain consumer protection conditions and notify ASIC before they launch the business.
“ASIC’s fintech licensing exemption reflects our commitment to facilitating innovation in financial services,” Price adds. “However, we are equally committed to ensuring that innovative products and services are regulated appropriately and promote good consumer outcomes.”
Firms that don’t qualify for ASIC’s fintech licensing exemption can instead seek an individual exemption.
“Individual applications are an important part of Australia’s regulatory sandbox framework,” Price says. “For instance, this option is open to existing licensees who wish to test an innovative product or service and comply with a modified version of the law.”
Along with the new exemption, ASIC also released new guidance for firms that intend to rely on the exemption, and it updated existing guidance to provide greater flexibility for “small-scale, heavily automated businesses”.
Last month, ASIC signed a deal with the Ontario Securities Commission (OSC) that aims to support cross-border innovation. This followed the introduction of the OSC’s new LaunchPad unit that is intended to help fintech firms navigate the regulatory framework.