Thinking Inside the Box: The UK FCA Sandbox, a Playground for Innovation
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Key takeaways
- The FCA’s regulatory Sandbox, first opened in 2015, has generally been well received by firms operating in the regulated financial markets.
- Technological developments such as distributed ledger technology could revolutionise the regulated financial products and services markets and access to a regulatory Sandbox could encourage firms to embrace these technologies and allay concerns they might have about breaching the applicable regulations.
- The application of distributed ledger technology has been tested by a number of participants in the FCA Sandbox with the results indicating clear benefits to consumers and/or adopters in the form of cost savings achieved through simplified processes and a reduction in the number of required intermediaries.
- Regulatory Sandboxes have been or are being opened by financial products and services regulators across many jurisdictions, including Singapore, Hong Kong, Canada and Lithuania, and the US regulators, at either the state or federal level, should seriously consider establishing their own regulatory Sandbox programmes.