As we reported on 4 November 2016, the Monetary Authority of Singapore (MAS) issued in June a consultation paper on proposed regulatory sandbox guidelines. The MAS has now published the final sandbox guidelines, which set out the objective and principles of the sandbox, and provide guidance on the application process and the information to be furnished by applicants to the MAS. The guidelines would be of interest to firms – including but not limited to financial institutions, Fintech firms, and professional services firms – that are seeking to apply technology in an innovative way to provide financial services that are or likely to be regulated by the MAS.
In line with the MAS’s original proposal, the applicant would be responsible for deploying and operating the sandbox once it has received MAS approval, while the MAS would be providing the regulatory support by relaxing specific legal and regulatory requirements on a case-by-case basis for the duration of the sandbox. While emphasising again that the “to maintain” and “possible to relax” lists of legal and regulatory requirements are non-exhaustive, the MAS has now added its outsourcing guidelines to the “possible to relax” list, in response to respondents’ request. The MAS has also expressed its willingness to consider non-regulatory support for sandbox entities – examples suggested by respondents to the consultation include financial support, cross-agency support, mentorship and training, access to Application Programming Interfaces, and provisioning of a cloud environment.
The MAS has helpfully clarified the application of the evaluation criteria for entry by giving examples of how an applicant may prove that the proposed Fintech solution meets the criteria. In particular, the MAS has relaxed the criterion that the applicant has the intention and ability to deploy the Fintech solution in Singapore on a broader scale after exiting from the sandbox, in recognition that this may not always be commercially viable. Applicants are now required to prove that they are prepared to “continue contributing to Singapore in other ways, such as continuing the developmental efforts of the proposed financial service in Singapore”, in the event that deployment of the Fintech solution in Singapore is not possible.
It is understood that the MAS has already received a number of sandbox applications since June, with the proposals covering a range of technologies including distributed ledgers, machine learning, and big data analytics.