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ASIC’S REGULATORY SANDBOX EXEMPTION PROPOSAL AN EXPLANATION Wednesday 8 June 2016 JOHN PRICE Commissioner, ASIC MARK ADAMS Senior Executive Leader, Strategic Intelligence and Co-Ordinator, Innovation Hub ASIC Outline Part 1: Setting the scene – John Price • • • • ASIC’s objectives and Innovation Hub Existing flexible framework Fintech start-up issues The facilitative proposals – overview and rationale Part 2: The Regulatory Sandbox Proposal – Mark Adams • The facilitative proposals – in detail • International comparison Part 3: Questions & Answers ASIC’s strategic objectives • Promote confident and informed financial consumers and investors • Promote fair, orderly, transparent and efficient financial markets ASIC’s Innovation Hub and approach • The Hub is assisting fintech start-ups to navigate the our regulatory system • Consistent with cutting red-tape • ASIC will not compromise fundamental principles of regulation and licensing Current flexible framework • Modular licensing frameworks • Option to operate as a representative • Assessment of organisational competence – ASIC discretion • Waivers and no-action policy and exemptions Fintech start-up issues – Barriers • Speed to market • Organisation competence • Access to capital Balancing act • Promoting consumer and investor outcomes • Promoting market efficiency Measures proposed - overview • Additional guidance – organisational competence • Limited licence – alternative organisational competence • Limited licensing exemption (the ‘regulatory sandbox’ exemption) The balance • Additional flexibility and guidance • Limit activities with consumer outcomes conditions » Satisfy the fundamental principles of regulation and licensing in alternative ways Additional guidance - Competence • ASIC’s existing discretion – organisational competence • Application of discretion in practice • Proposed examples: • Nature of financial services • Nature of financial products • Knowledge & skills Limited licence – automated services • Propose alternative – Organisational competence • Automated business models • ‘Professional’ third party compliance sign-off • Timing of sign-off • Nature of sign-off The ‘regulatory sandbox’ exemption • Available for new Australian financial service businesses • Six months duration • Limited financial services only • Consumer protection - conditions on the exemption The ‘regulatory sandbox’ exemption – Conditions • Advice or dealing service • Liquid products • Client and investment caps • Adequate compensation arrangements • External dispute resolution arrangements • Core conduct and disclosure obligations • Sandbox ‘sponsorship’ • Notification and report requirements International Comparison • United Kingdom – framework in place: ‘regulatory sandbox’ (entity specific limited licence) • United States – ‘No-action’ approach • Singapore – ‘regulatory sandbox’ proposal to be issued Submissions: Consultation Paper 260 Closing date for submissions is 22 July 2016 Questions? Web: http://asic.gov.au/for-business/yourbusiness/innovation-hub/ Email: [email protected]
