The UK Financial Conduct Authority (FCA) issued a press release on July 3 announcing the latest cohort of firms accepted into its regulatory sandbox. Twenty-nine firms were accepted, which represents the largest cohort to date. The sandbox, now in its fourth year, allows firms to test their products and services in a controlled environment, prior to use in the open market where they would be subject to the full suite of regulations and associated costs.
The United Kingdom is a leader worldwide in supporting growth and innovation in the world of financial technology. Similar efforts are occurring in the United States, but lag behind UK developments; as we reported just three months ago, Arizona became the first state in the United States to enact a law to create a “Fintech Sandbox.”
Focus of cohort
The focus of this year’s UK Fintech Sandbox cohort appears to be on the capital-raising process, with a large number of applicants seeking to increase the efficiency of the process and improve access to capital, including six firms seeking to automate the issuance of debt or equity. Other notable innovations among the UK cohort include the use of distributed ledger technology (over 40% of the cohort), firms offering automated or “robo” investment advice, and the continued increase of firms seeking to use technology to streamline the AML/KYC process.