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FCA proposes “virtual sandbox” for fintech launches
The UK’s Financial Conduct Authority (FCA) has told fintech companies they should consider creating a “virtual sandbox” where new technologies can be tested using shared databases to simulate markets. The FCA says it would provide the databases of market prices and other information.
The idea is one result of the FCA’s Project Innovate, designed to foster innovation in the financial industry, and was included in a November 2015 report.
The virtual sandbox would would be created by so far unspecified industry players. It would be particularly beneficial to small-start ups which lack the resources to create their own testing environment, although the FCA says the data will be available to all firms.
The tests would vary according to the products under review and the market risks involved, says the FCA, but the idea is to provide a facility that will enable products to be developed more quickly and thereby foster competition.
The FCA also proposed a “regulatory sandbox”, which would be overseen by the FCA and would function as a 'safe-space' where new products could be initially shielded from unnecessary compliance requirements.
The FCA organised conferences on the topic of the regulatory sandbox on December 15 and 16, and is now waiting for feedback from the industry. It expects to have it up and running before the end of the first half of the year.