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ASIC calls on Fintechs to engage with them

Monday 28 August 2017

Fintechs should to talk to the Australian Securities and Investment Commissions (ASIC) about their business models.
This is according to Mark Adams, Senior Executive for Strategic Intelligence, who represented ASIC at the Meet the Regulators event at We Work in Pyrmont on August 17th.

The event came on the heels of the recent Australian Prudential Regulation (APRA) event that focussed on phased licensing, Licensing: A phased approach to authorising new entrants to the banking industry, and the announcement of the first phase of the digital currency reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act.

Also in attendance at the Meet the Regulators event were Australian Transaction and reporting Analysis Centre (AUSTRAC), the Australian Prudential and Regulation Authority (APRA), the Reserve Bank of Australia (RBA) and the Office of the Australian Information Commissioner (OAIC).
With so many developments in the fintech sector, it seemed clear to all attendees that these new technologies will change businesses generally.
According to Adams, the impact on business and the financial sector was the driver for the regulatory sandbox and the innovation hub. He stressed that ASIC want to encourage innovation without compromising the regulator’s basic principles and duties.

The Innovation Hub and the Regulatory Sandbox
Since the middle of 2015, ASIC has dealt with 200 entities, with 164 receiving informal insistence.
“More recently, we have been highlighting our ambitions around RegTech,” Adams explained. “We really want to engage with that sector because of the importance of what it can deliver.”
He added there have been 35 licenses and 11 variations.
“ASIC, I think, administers it’s jurisdiction in a way which delivers licenses to people and that’s the important thing to remember.”
Adams said that initially, marketplace lending and robo-advice were way out in front; increasingly, however, there are new technologies coming to the forefront.
The regulator is not just about engaging but is also focussed on facilitation and that has been the purpose behind the creation of the ‘regulatory sandbox’. Since the sandbox was set up in December last year, three entities have given their notifications, and one of the two entities have come through the sandbox and got their license within a month.
“One of the interesting things about the sandbox is that it helps people come forward and think about how they fit in the framework.”
Currently, four to 12 entities are thinking about using the sandbox, so it seems the space is developing.
For ASIC, the question of regulation is not a domestic one but an international one, since ASIC has signed up to the memorandum of understanding with other regulators in other jurisdictions.

ASIC has a showplace planned at the end of September. This is following the paper released in May that examined the type of relationship regulators should have with RegTech.
“Based on the submissions we received, we are planning to do a bit of a hybrid, a showcase event,” Adams said. “More will be announced on that, but there is some basic information on our webpage already. “
He added that the event will look at regulatory reporting and what the future will hold on that.
“We want to get ready for the world where we will be accessing data—whether that be via blockchain or in any other forms.”
Another issue that will be dealt with at the event is that of meeting obligations, since the question often posed to the regulator is about putting the obligations into software code and other questions.