FCA and IA launch fintech initiatives

Fintech was the order of the day on Monday as the Financial Conduct Authority and Investment Association launched initiatives aimed at supporting innovative firms that have the potential to transform the asset management industry.

FCA and IA launch fintech initiatives

The FCA signed an agreement with the US Commodity Futures Trading Commission (CFTC) to support innovative firms through their respective fintech initiatives – LabCFTC and FCA Innovate.

Named the Cooperation Arrangement on Fintech Innovation, the agreement is the first of its kind between the CFTC and a non-US counterpart.

The UK financial services watchdog first launched its Innovate Hub back in October 2014 to help new or non-regulated businesses looking to introduce “groundbreaking” or “significantly different financial products or services” to better engage with the regulator. The CFTC launched its own LabCFTC initiative more recently in May 2017.

The new arrangement promotes the sharing of information on fintech market trends and developments, as well as insights gleaned from each authority’s regulatory sandbox or proof of concept. The transatlantic regulators will also help those fledgling fintech firms interested in entering the others’ market.

“International borders shouldn’t act as a barrier to innovation and competition in financial services and that is why agreements like the one we have signed today with the CFTC, a forward looking and proactive regulator, are so important,” said Andrew Bailey, FCA chief executive.

“As our first agreement of this kind with a US regulator, we look forward to working with LabCFTC in assisting firms, both here in the UK and in the US, who want to scale and expand internationally in our respective markets. As part of the arrangement, the FCA and the CFTC will be hosting a joint event in London to demonstrate how firms can engage with both regulators.”

VeloCity

Meanwhile, the IA announced it will be launching a specialist “fintech accelerator” called VeloCity later this year to speed up the adoption of emergent technology across the asset management industry.

The programme will identify two crops of four to eight firms per year with “market-viable technology” and assist them with creating business-ready solutions for fund groups. Said solutions will touch on everything from machine learning and artificial intelligence to distributed ledger technology harnessed by blockchain, as well as cloud-based infrastructure and big data.

The UK asset management industry has long been criticised for being behind the curve when it comes to integration of smart technologies, which is why Chris Cummings, IA chief executive, said a programme like VeloCity is long overdue.

“To remain globally competitive, the UK asset management industry must be restless in its quest for innovation and reinvention,” he said. “Fintech firms are a key element in this process, driving innovation across the asset management industry to the benefit of investors, savers and pensioners.

“The launch of VeloCity, the IA’s new fintech accelerator, will act as catalyst in speeding up the take-up of new technology in the sector and ensure that fintech firms are embedded into the asset management ecosystem.”

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