Ontario and Québec regulators join the “Global Sandbox”

The Global Financial Innovation Network launches

On August 7, 2018, the United Kingdom’s Financial Conduct Authority (FCA) announced the creation of the Global Financial Innovation Network (GFIN) in collaboration with 11 overseas financial regulators. The creation of GFIN emerged from the FCA’s consultation in February 2018 proposing the idea of a “global sandbox”. The Network seeks to create a new framework for cooperation between financial services regulators on innovation-related topics. In so doing, GFIN will provide a more efficient way for innovative firms to interact with regulators on a global platform, helping them navigate between countries as they look to scale new ideas.

Joining GFIN’s ranks are two Canadian regulators; the Ontario Securities Commission (through the OSC LaunchPad) and Québec's Autorité des Marchés Financiers. GFIN’s other regulators span across the globe and include regulatory bodies from Abu Dhabi, France, Australia, Bahrain, the U.S., Dubai, Guernsey, Hong Kong, and Singapore.

GFIN’s consultation period

The regulators involved with GFIN have also published a consultation paper to seek comment on the Network’s proposed mission statement, functions, and key focus areas. The consultation sets out the three main functions of the GFIN:

  • To act as a network of regulators to collaborate and share experience of innovation in respective markets, including emerging technologies and business models;
  • To provide a forum for joint policy work and discussions; and
  • To 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 prioritize activity. The deadline for comments is October 14, 2018.

The OSC LaunchPad and GFIN’s potential areas for impact

The OSC, AMF and other Canadian securities regulators have an extensive and positive history of working collaboratively with regulators in other jurisdictions. The OSC LaunchPad, in particular, is no stranger to the concept of regulatory sandboxes. It engages with fintech businesses informally through events and formally through requests for support. It has been formative in working with other regulators to improve access to opportunities for both fintechs and investors on a national and international level. The OSC LaunchPad is the first dedicated team by a securities regulator in Canada to provide direct support to eligible fintech businesses navigating regulatory requirements. It already has agreements with financial regulators in the following countries to facilitate Ontario-based innovators to attract and do business with investors around the globe:

  • Australian Securities and Investments Commission (ASIC)
  • U.K. Financial Conduct Authority (FCA)
  • Abu Dhabi Global Market Financial Services Regulatory Authority
  • France Autorité des Marchés Financiers (AMF France)

While GFIN is still in its infancy, its coordinated multilateral approach may prove particularly fruitful in relation to subject matters with cross-border application such as: artificial intelligence, distributed ledger technology, data protection, regulation of securities and Initial Coin Offerings, know your customer (KYC), and anti-money laundering (AML). It remains to be seen how GFIN’s mandate evolves in light of the consultation period. Nevertheless, the advent of the Network and the Canadian involvement in its inception is a welcome step toward enhancing fintech innovation and corresponding regulation.

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Editors

Lawrence E. Ritchie

Partner, Litigation

Alexander Cobb

Partner, Litigation

Shawn Irving

Partner, Litigation

Kevin O’Brien

Partner, Litigation

Lauren Tomasich

Partner, Litigation

Malcolm Aboud

Associate, Litigation