On June 6, the Monetary Authority of Singapore (MAS) released a consultation paper entitled “Consultation Paper on FinTech Regulatory Sandbox Guidelines” (Consultation Paper), which sets out proposals for a regulatory sandbox approach (Sandbox) aimed at carving out a safe and conducive space to experiment with financial technology (FinTech) solutions.
The MAS aims to transform Singapore into a smart financial center by encouraging the adoption of innovative and safe technology in the financial sector. To this end, the Sandbox is intended to encourage more FinTech experimentations within a well-defined space and duration where MAS will provide regulatory support by relaxing specific legal and regulatory requirements. Below is a summary of the proposed operation of the Sandbox.
Sandbox Evaluation Criteria
The MAS proposes using the following criteria to assess an applicant’s proposal. The proposal should contain the necessary supporting information to depict whether:
- the applicant has the intention and ability to deploy the FinTech solution in Singapore on a broader scale after exiting the Sandbox;
- the FinTech solution is technologically innovative and addresses a significant problem or issue or brings benefits to consumers or the industry;
- the Sandbox test scenarios and outcomes are clearly defined and the applicant will report to MAS on the test progress based on an agreed schedule;
- the appropriate boundary conditions are clearly defined, and major foreseeable risks arising from the FinTech solution are assessed and mitigated; and
- an acceptable exit and transition strategy is clearly defined in the event that the solution has to be discontinued, or the strategy can proceed to be deployed on a broader scale after exiting the Sandbox.
Exiting the Sandbox
Any legal and regulatory requirements relaxed by the MAS will expire once the stipulated Sandbox period ends, and the applicant will be required to exit the Sandbox. In the event that an extension of the Sandbox period is required, the applicant should apply to the MAS at least a month before the Sandbox expiration date and provide justifications for the extension.
Upon exiting, the applicant can proceed to deploy the solution on a broader scale, provided that both the MAS and the applicant are satisfied that the Sandbox has achieved its intended test outcomes and the applicant can fully comply with the relevant legal and regulatory requirements.
Sandbox Application Procedure
Applications to the MAS should contain the proposal and a completed form in the proposed template in Annex B of the Consultation Paper. For the initial application stage, the MAS will endeavor to inform an applicant of its potential suitability for a Sandbox within 21 working days of the application’s submission. For the subsequent evaluation stage, the time required to assess the proposal would differ on a case-by-case basis, depending on the complexity and specific legal and regulatory requirements involved.
Feedback Deadline
Please refer to the Consultation Paper for the complete set of proposals. The Consultation Paper is open for public comments until July 8, 2016.
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