As the first of such initiative in the Middle East and North Africa (MENA), the so-called Regulatory Laboratory (RegLab) has been set up to cater for the unique risks and requirements of fintech companies.
The RegLab forms part of the FSRA’s strategy to develop a stable and sustainable financial services sector in Abu Dhabi, “while fostering innovation within scoped parameters buffered by risk-proportionate regulatory safeguards”.
How it works
To address concerns surrounding regulatory compliance, time-to-market, and operational cost efficiency, FSRA has proposed a “blank-sheet” approach to the RegLab.
Instead of being subjected to the full suite of authorisation regulation and rules from the outset, a customised set of rules will be applied, depending on the business model, technology deployed and risk-profile of each fintech company.
Under the proposed framework, the firms will be granted two years to develop, test and launch their products and services in a controlled environment.
After which, those with viable business models will be transferred to the full authorisation and supervisory regime upon successful demonstration of compliance with the authorisation criteria.
Firms who are not ready after the two-year period will exit the RegLab framework.
Holistic approach
Ahmed Al Sayegh, chairman of Abu Dhabi Global Market (ADGM), said: “By providing fintech participants the certainty of obtaining relevant regulatory approvals on a stable platform where they can test or deploy new technologies, the RegLab draws on a holistic approach to support Abu Dhabi’s vision of developing an innovative financial services sector that is underpinned by robust regulatory principles.
“Together with our partners and key stakeholders, ADGM aims to develop an environment that harnesses fintech’s potential to increase efficiency, widen consumer choice and facilitate better risk management in the financial services industry within Abu Dhabi and the GCC region.”
Public consultation
Having already sought feedback from key local and global stakeholders, the ADGM on Tuesday published a public consultation of its plans.
The response window closes 13 June 2016.
