Highlights from the Capital Markets Authority Regulatory Sandbox Consultation Forum

The Capital Markets Authority Regulatory Sandbox Policy Guidance Note (PGN) forum brought together stakeholders in the fintech space to discuss the upcoming sandbox that is expected to spur fintech innovation and growth in the sector.

The forum was attended by both fintechs and law firms that seek to further understand the PGN and participation requirements while also helping further refine it.

The CMA highlighted key aspects of the PGN and welcomed varied suggestions from the stakeholders. Some of the key features discussed included:

  • There is no one size fits all and the entrance is open.
  • The current sandbox is limited to financial solutions with a capital market component but not the entire space.
  • CMA sandbox is limited to securities which are clearly defined in law.
  • Sandbox open to mature ideas ready for market. The authority has internal capacity to determine maturity and weed out raw ideas.
  • A projected plan and exiting strategy from the sandbox is required.
  • The fintech understands the risk best and will advise CMA why they need to be sandboxed.
  • There will be no exemption on current laws such as market manipulation, AML etc. A few can be relaxed but it will be agreed upon beforehand.
  • Before revocation, there will be engagement. However, there will be no arbitration thereafter.
  • Participants will engage with CBK where the jurisdiction is beyond the authority directly while CMA also does the same. A No Objection will be required from the CBK before the applicant can move ahead in such instances.
  • IP rights is beyond CMA jurisdiction. Applicants advised to consult with KIPI on the same.
  • CMA will be looking to partner with innovation hubs to help startups that are looking to scale.
  • Periodic tests and reporting will determine if one needs to be in the sandbox longer. No applicant will exceed 12 months in the sandbox.
  • 25-day feedback period for sandbox approval plus a 14-day assessment period for sandbox on-boarding.
  • Whether an application can have more than one application on a sandbox was left pending and to be discussed.
  • An applicant that has been sandboxed somewhere else can provide the needed data to shorten the sandbox period before going to market.
  • Capacity will be determined by the number of applications.
  • You don’t have to be registered by another regulator to join the sandbox.
  • Blockchain startups are welcome and no special requirements are needed. Crypto startups will be subject to CBK’s stand on cryptocurrencies. 
  • A No Objection is required from CBK before moving ahead with some applications. CMA will write to CBK, approaching them directly first. CBK might require the applicant to go directly and engage.
  • CMA will be engaging other financial regulators during the process.
  • CMA will be looking to work on a collaboration framework with other regulators. This will be work in progress.
  • While sandboxed, there is no reason to partner with a licensed entity.
  • PGN to be implemented by March 2019.
  • PGN to be launched and ready by April 2019.

CMA will have an official public launch of the sandbox before going live opening up the opportunity to startups looking to get sandboxed sometime before April 2019.