On Feb. 19, the Commodity Futures Trading Commission announced an arrangement with the U.K.’s Financial Conduct Authority that commits the two regulators to collaborating and supporting innovative firms through each other’s financial technology initiatives—LabCFTC and FCA Innovate. The arrangement focuses on information-sharing regarding fintech market trends and developments as well as information and insight derived from each authority’s relevant sandbox, proof of concept, or innovation competitions. In addition, the FCA and the CFTC will be hosting a joint event in London to demonstrate how firms can engage with both regulators.
“International borders shouldn’t act as a barrier to innovation and competition in financial services and that is why agreements like the one we have signed today with the CFTC, a forward-looking and proactive regulator, are so important,” said FCA Chief Executive Andrew Bailey. “As our first agreement of this kind with a U.S. regulator, we look forward to working with LabCFTC in assisting firms, both here in the U.K. and in the U.S., who want to scale and expand internationally in our respective markets.”
The arrangement follows the creation of FCA Innovate in October 2014 and LabCFTC in May 2017. Among other activities, these initiatives were set up to help businesses with innovative ideas navigate the regulatory landscape and engage with the regulator. To date, the FCA’s Innovation Hub, which includes a regulatory sandbox, “techsprint” events and an advice unit, has supported over 500 businesses and the authorization of 43 businesses. LabCFTC has engaged with over 150 entities since its launch last year, published its first primer on the topic of virtual currencies, and soon will seek public feedback on a planned 2018 innovation competition.
In related news, the FCA issued a “call for input” on Feb. 20 on how technology can make it easier for firms to meet their regulatory reporting requirements and improve the quality of the information they provide. The FCA's request stemmed from a two-week “techsprint” exercise held in November 2017 at which participants developed a proof of concept for machine-readable reporting requirements. The FCA said this would allow firms to map the reporting requirements directly to the data that they hold, “creating the potential for automated, straight-through processing of regulatory returns.” The call for input outlined how this proof of concept was developed and asked for views on how the FCA can improve this process. The paper also asked for feedback on broader issues surrounding the role technology can play in regulatory reporting. Responses are due by June 20, and the FCA plans to announce the next steps during the summer.