The U.K. Financial Conduct Authority's regulatory sandbox continues to grow in popularity, the FCA said Thursday.
The FCA reports that it received 77 applications for the second phase of its regulatory sandbox from financial technology firms (fintechs), and that 31 of these applications have been accepted for market testing. In the first phase, it received 69 applications and 18 firms had testing plans approved in October 2016.
In the second phase, 24 firms are ready to begin testing shortly, the FCA says. The tests will cover a range of ideas including payment services utilizing distributed ledger technology (DLT) and artificial intelligence (AI) software that aims to better determine client preferences before financial advice is provided.
"The sandbox continues to grow in popularity and it is particularly encouraging that both the number of firms applying and accepted for testing has increased in cohort two. That means more innovative firms, trialling more innovative propositions to bring to the market. This is an important part of the FCA's commitment to promoting innovation and competition in the markets we regulate," says Christopher Woolard, executive director of strategy and competition, FCA, in a statement.
The FCA also reports that the first wave of tests within the sandbox have been completed, and that firms are preparing final reports, which will be reviewed before the firms transition out of the sandbox.
"The majority of tests have developed as planned towards meeting their objectives and the FCA currently expects most firms to take forward their propositions to market," the FCA says in a statement.
The regulator is now accepting applications from firms to be part of our third phase of the sandbox. Firms have until July 31 to submit their applications, for testing to start in November.
Several regulators around the world, including the Canadian Securities Administrators (CSA), are utilizing regulatory sandboxes to allow fintechs to test innovative new products and services under restricted conditions.