The Financial Conduct Authority (FCA) has announced the 29 firms that were successful in their applications to begin testing in the fourth cohort of the regulatory sandbox.
The regulatory sandbox allows firms to test innovative products, services or business models in a live market environment, while ensuring that appropriate protections are in place. It is part of Innovate, an initiative kicked off in 2014 to promote competition in the interest of consumers. The sandbox was a first for regulators worldwide, which the FCA says underlines its commitment to innovation in financial services.
Over 40% of companies accepted to cohort four are using distributed ledger technology (DLT). Of these, six are using DLT to automate the issuance of debt or equity. Two are using DLT to support the provision of insurance. Other technology applied includes geo-location technology, use of Application Programming Interfaces (APIs) and artificial intelligence.
The FCA has also accepted a small number of firms that will be testing propositions relating to cryptoassets, to help explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks.
“I am pleased to say that this is the largest sandbox cohort to date with a record number of applicants meeting our eligibility criteria,” commented Christopher Woolard, executive director of Strategy and Competition at the FCA. “Cohort 4 has seen a large increase in the number of firms testing wholesale propositions including firms that are aiming to increase the efficiency of the capital-raising process. Alongside these we can see significant use of distributed ledger technology, some experimentation with cryptoassets which will help inform our policy work and propositions aimed at helping lower income consumers.”
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