MAS Proposes a “Regulatory Sandbox” for FinTech Experiments

MAS Proposes a “Regulatory Sandbox” for FinTech Experiments

by June 6, 2016

The Monetary Authority of Singapore (MAS) today released a consultation paper on proposed guidelines for a “regulatory sandbox” that will enable financial institutions (FIs) as well as non-financial players to experiment with financial technology (FinTech) solutions.

The FinTech landscape is fast evolving, with a proliferation of technological innovations and solutions. MAS encourages FIs to test and introduce these innovations if they are relevant, and do their own due diligence. However, there may be circumstances where it is less clear whether a particular FinTech solution complies with regulatory requirements or poses unacceptable risks. The uncertainty may stifle promising innovations, and may result in missed opportunities.


An Illustration on how the MAS FinTech Regulatory Sandbox can Encourage Experimentation of Innovative FinTech Solutions

The regulatory sandbox will enable FIs or any interested firms to experiment with innovative FinTech solutions in an environment where actual products or services are provided to the customers but within a well-defined space and duration. For the duration of the regulatory sandbox, MAS will relax specific regulatory requirements which an applicant would otherwise be subject to.

MAS recognizes that failure is often a feature of such experiments and the purpose of the regulatory sandbox is to provide appropriate safeguards to contain the consequences of failure for customers rather than to prevent failure altogether.

MAS proposes that applications for solutions to be tested in the regulatory sandbox be assessed on criteria such as the extent of innovativeness of the FinTech solution, whether the applicant has the intention and ability to deploy the solution in Singapore on a broader scale as well as whether the solution brings benefits to consumers and/or the industry.

Interested firms are encouraged to approach MAS to discuss how their innovative FinTech solutions can be launched in the regulatory sandbox, even while the proposed guidelines are being consulted and finalized.

Ms Jacqueline Loh, Deputy Managing Director of MAS, said, “MAS aims to provide a responsive and forward-looking regulatory approach that will enable promising FinTech innovations to develop and flourish. The sandbox will help reduce regulatory friction and provide a safer environment for FinTech experiments. We believe this will give innovations a better chance to take root.”

The public consultation will be open from 6 June 2016 to 8 July 2016. A copy of the public consultation paper is available on the MAS website.

Regulatory Sandbox Infographics