ASIC expands FinTech cooperation network into continental Europe through agreement with Swiss regulator

On 18 October 2017, the Australian Securities and Investments Commission (ASIC) and the Swiss Financial Markets Authority (FINMA) entered into a new agreement to cooperate on innovation in the financial sector.

The agreement aims to encourage innovation in financial services in Switzerland and Australia, and in line with similar agreements on FinTech innovation, financial services innovators will be supported in meeting legal requirements when operating in each country.

The Agreement enables ASIC to refer innovative businesses to FINMA, where they will receive the same level of support offered to local FinTech companies.  ASIC will also accept referrals from FINMA, and provide support for these innovative businesses through its Innovation Hub. This includes dedicated contacts in each regulator and support prior to and during the authorisation process.

Under the Agreement, ASIC and FINMA will exchange information on regulatory and policy issues on issues relevant to FinTech, including innovation in financial services and market trends and developments.

The press release highlights that investment is a key element of contemporary ties between Australia and Switzerland. Switzerland is Australia’s tenth-largest source of foreign investment, worth AU$50.2 billion at the end of 2015. Swiss cities Zürich and Geneva have a long history as financial centres, and the FinTech industry in Switzerland has recently gained a lot of momentum on the back of government initiatives to encourage growth in this sector. There are more than two hundred estimated FinTech startups in Switzerland, specialising in areas like wealth management, comparative consulting, crypto finance, data management, payment services and lending.

Signing the agreement in Madrid last week, ASIC Chairman Greg Medcraft said, “This expands our innovation cooperation network into continental Europe, and with Switzerland, opens up another key financial centre for Australian FinTech expansion.”

“This agreement cements an already strong relationship with FINMA, and we look forward to ongoing collaboration in the fast-paced fintech environment in both countries.”

ASIC has been working on developing guidance about how FinTech developments fit into the Australian regulatory framework (such as guidance for entities using or planning to use blockchain technology). In 2015, ASIC launched its Innovation Hub to help FinTechs navigate the regulatory framework without compromising investor and financial consumer trust and confidence.

ASIC introduced a FinTech regulatory sandbox in December 2016. It allows eligible businesses to test certain financial and credit services for up to 12 months without needing to apply for a licence. On October 24, the Australian Government released exposure draft legislation and regulations to create an enhanced regulatory sandbox, with an expanded 24-month testing timeframe and a wider range of eligible products and services.

ASIC has been collaborating closely with regulators in other jurisdictions to understand developments, and to help entrepreneurs expand their target markets into other jurisdictions.

To date, ASIC has entered into FinTech referral and information-sharing agreements with the Monetary Authority of Singapore, the United Kingdom’s Financial Conduct AuthorityOntario Securities CommissionHong Kong Securities and Futures Commission, the Japan Financial Services AgencyMalaysia Securities Commission and Abu Dhabi Global Market Financial Services Regulatory Authority. Recently, ASIC and the Financial Markets Authority (FMA) of New Zealand re-affirmed their commitment to collaboration and cooperation on the expanding opportunities in FinTech and innovation.

In addition, information-sharing agreements have been entered with the Capital Markets Authority, Kenya and Otoritas Jasa Keuangan (Financial Services Authority of Indonesia), Indonesia.

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