ASIC widens its fintech ties in Asia

The Australian Securities and Investments Commission (ASIC) has been swiftly growing its list of fintech cooperation agreements with other financial regulators, adding three new agreements in June alone.

These were with the Japan Financial Services Agency (JFSA), Malaysia Securities Commission (SC) and Hong Kong Securities and Futures Commission (SFC). They are aimed at supporting and understanding financial innovation in each economy and allow for information sharing between the regulators.

They follow earlier agreements with the United Kingdom’s Financial Conduct Authority, Monetary Authority of Singapore, the Ontario Securities Commission, Kenya’s Capital Markets Authority and Indonesia’s Otoritas Jasa Keuangan.

Signing the agreement with Malaysia’s SC, ASIC Chairman Greg Medcraft said: 'International cooperation on fintech is essential. This agreement will help local businesses grow beyond our borders and improve our understanding of fintech in the region.’

Malaysia is an attractive market because it enjoys high levels of digital adoption and internet penetration. It was the first Asia Pacific nation to regulate for equity crowdfunding in 2015.

As ASIC Commissioner John Price notes: 'Japan has been a world leader in technology for a long time.’ Its economy is the third largest in the world, with services, including financial services, accounting for about three quarters of GDP.

Meanwhile, Hong Kong is already Australia's seventh most important destination for services exports, valued at AUD$2.4 billion last year, and sixth largest source of services imports, valued at AUD$3 billion.

‘Financial services are a major contributor to Hong Kong's US$316 billion economy. The cooperation agreement is a significant boost for Australia's burgeoning fintech sector and will ease entry into this important market for innovative Australian businesses,' observed ASIC Commissioner Cathie Armour, when signing the agreement with Hong Kong’s SFC.

According to ASIC, total investment in fintech in the Asia-Pacific region been growing exponentially in recent years, reaching $8.6 billion in 2016 — up from $0.5 billion in 2013.

All three cooperation agreements will enable regulators to refer innovative fintech businesses to each other for advice and support.

In addition to developing guidance about how the emergence of fintechs fit into its regulatory framework, ASIC has launched an innovation hub to help fintechs navigate the regulatory framework without compromising investor and financial consumer trust and confidence.

The hub also helps ASIC to monitor and understand fintech developments. At present, ASIC says it is seeing innovative financial business models in areas such as marketplace lending, crowdfunding, robo-advice, payments and blockchain technology.

According to press reports, ASIC is working on further agreements, including with China, as regulators across the Asia-Pacific look to better understand and monitor fintech start-ups seeking to operate across borders.

China is emerging as the world’s fintech market leader. A report by EY states that for the period July 2015 to June 2016, Chinese fintech investments in the market surged to US$8.8 billion. EY sees opportunities emerging from under-banked or unbanked small and medium enterprises (SMEs) and consumers with unmet needs. Fintechs are also targeting the maturing demands of the burgeoning middle class for wealth management, insurance and private banking, it says.

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