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MAS Proposes Pre-Defined FinTech Sandboxes with Fast-Track Approvals

Dec 10 2018 | by OrionW

The Monetary Authority of Singapore (MAS) began a public consultation on 14 November 2018 on its proposal to offer fast-track sandbox approvals for innovative FinTech services that satisfy certain pre-defined criteria.  The proposed scheme, dubbed “Sandbox Express”, is designed for financial services and products that carry low risks, or risks that are well understood and could be reasonably contained within the construct of a pre-defined sandbox.  Sandbox Express is meant to be complementary to the FinTech Regulatory Sandbox launched in 2016.  For a better understanding of the FinTech Regulatory Sandbox, you may read our article here.

MAS has identified insurance broking, recognised market operators (RMOs) and remittances as the initial set of pre-defined sandboxes.  Certain conditions and obligations would apply to the firms in these pre-defined sandboxes to safeguard the interests of the firms’ customers and contain the risks of the experiments.  For example, the period for firms to experiment in the pre-defined sandboxes is proposed to be limited to a maximum of 6 months.  During this period, the firms in the insurance broking and RMOs sandboxes will be exempted from registration/recognition as insurance brokers and RMOs respectively.  Firms in the remittances sandbox will be granted a remittance licence and exempted from the requirement to hold S$100,000 of security deposit for each place of business.

However, the sandbox constructs are predictably narrow.  For example, the insurance broking sandbox will be limited to 1000 completed transactions and the firm cannot handle or hold customers’ funds.  The RMO sandbox will be limited to institutional investors and accredited investors who are not individuals and caps trading volume at SGD 5 billion for securities or 5 million derivative contracts.  The remittance sandbox will limit the outstanding transactions at any one time to SGD 100,000.  Other conditions apply to each sandbox.

Firms in the pre-defined sandboxes will also be required to provide clear and proper disclosure to every user and obtain an acknowledgement before the user can be on-boarded as a customer, and submit a progress report to MAS bi-monthly.

MAS will expedite the processing of each application by making an assessment based on two criteria only, namely whether the applicant’s key stakeholders (i.e., persons with substantial shareholdings in the applicant, chief executive officers, directors and other relevant persons as necessary) are fit and proper, and technological innovativeness of the proposed financial service or product.  MAS intends to process Sandbox Express applications within 21 days.

The public consultation will end on 13 December 2018.  A copy of the consultation paper can be found here.