Financial Technology Regulatory Sandbox Framework


The regulatory sandbox framework for financial technology innovations in Malaysia. The FTEG Regulatory Sandbox section provides detailed information about the sandbox including its operation, who is elegible to apply, a regulatory sandbox application form, answers to frequently asked questions and a weath of resources.

Overview of the Malaysia FTEG FinTech Regulatory Sandbox (excerpt)

The Bank seeks to provide a regulatory environment that is conducive for the deployment of fintech. This includes reviewing and adapting regulatory requirements or procedures that may unintentionally inhibit innovation or render them non-viable. As part of this process, the Financial Technology
Regulatory Sandbox Framework (Framework) is introduced to enable innovation of fintech to be deployed and tested in a live environment, within specified parameters and timeframes.

Risk and failure are an integral part of innovation. Given that a regulatory sandbox (sandbox) operates in a live environment, failure may result in financial loss or other risks to the sandbox participants and their customers. It is therefore imperative for the sandbox to incorporate appropriate
safeguards to manage the risks and contain the consequences of failure.

 A sandbox cannot be used to circumvent existing laws and regulations. A sandbox is therefore not suitable for proposed product, service or solution that is already appropriately addressed under prevailing laws and regulations. For product, service or solution that is not suitable to be tested
in sandbox, the Bank will take the approach of an “Informal Steer” to provide guidance and advice to the financial institutions or fintech companies on the modifications that can be made to align proposed business models or solutions with prevailing laws and regulations. This approach is suitable
where the modified business model or solution does not significantly diminish the value proposition of the innovation.

In considering an application to participate in the sandbox and the types and extent of regulatory flexibilities that may be accorded to the financial institutions or fintech companies operating in a sandbox, the Bank will take into account, among others, the following –

(a) the potential benefits of the proposed product, service or solution;
(b) the potential risks and mitigating measures; and
(c) the integrity, capability and track record of the financial institutions or fintech companies.

The Bank will consider the number of participants that can be effectively supported within the sandbox at any one time to ensure that adequate guidance and oversight can be provided to participants of the sandbox.

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Thursday, October 18, 2018
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