UK finance regulator collaborates with US counterpart on fintech
The FCA is working with a US finance regulator to support financial technology companies on both sides of the Atlantic
The UK financial services regulator is working with a US counterpart to support financial technology (fintech) companies attempting to break into their respective markets.
The Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC) will work together to support companies in each of their fintech programmes.
The FCA Innovate programme, which was launched in 2014, offers a regulatory sandbox environment for fintech providers, as well as other advice and support.
According to the CFTC, its LabCFTC programme is an effort to promote responsible fintech innovation and competition for the benefit of the US public.
“As our first agreement of this kind with a US regulator, we look forward to working with LabCFTC in assisting firms, both here in the UK and in the US, that want to scale and expand internationally in our respective markets,” said FCA CEO Andrew Bailey.
The fintech cooperation focuses on information-sharing regarding market trends and developments. It also enables fintech companies in the UK and US to enter each other’s markets.
The US is a giant in fintech compared with the UK. Figures released by Innovate Finance last year found that in 2016 the US received the second largest amount of fintech capital in the world ($6.2bn), behind China ($7.7bn). The UK was third largest, with only £783m. Globally, fintechs received $17.4bn.
Read more about fintech in the UK
- An international fintech delegation to UK: now you see them, now you don’t. Just like that.
- Most UK businesses are using financial technology products and services in some way, with cost savings being the main attraction.
- Investment in UK fintech went down in 2016, but is still ahead of 2014 numbers, according to figures from FinTech Global.
Closer ties to the US are increasingly likely as the UK breaks its ties with the European Union (EU), and fintech is no exception.
Fintech providers in the UK fear a situation where the UK leaves the EU without a trade deal. It is one of the most promising tech sectors in the UK, but it could be the one that suffers the most as a result of Brexit.
The loss of passporting rights, which gives finance firms license to trade throughout the EU, could make the concerns of startups outside the finance sector seem minor.
A recent meeting between the House of Lords EU committee heard the fears of three executives from the IT sector in the UK. They included Russ Shaw, founder of Tech London Advocates and Global Tech Advocates.
Shaw highlighted the huge risk to the startup community in a scenario where the UK has no deal with the EU, or even a bad deal, but emphasised that fintech could suffer most.
“The entrepreneurs I meet say they will just get on with it and make the best of it, but it will be a very, very disruptive process for a number of them, particularly those in the fintech sector. That is one of the most vibrant aspects of the tech community in London, and many of the companies will need passporting rights.”
He went on to praise the FCA for trying to find solutions to this type of problem.