The Australian Securities and Investment Commission (ASIC) has signed an agreement with the Hong Kong Securities and Futures Commission (SFC) to provide mutual support to fintech businesses from Australia and Hong Kong seeking to operate in each other’s markets.
Under the agreement, ASIC and SFC will refer fintech businesses to each other for advice and support via ASIC’s Innovation Hub — aimed at helping fintech businesses navigate Australia’s regulatory framework without compromising investor and financial consumer trust — and its Hong Kong-based equivalent, SFC’s Fintech Contact Point.
This means that if an Australian fintech business meets the eligibility criteria and wants to operate in Hong Kong, the agreement ensures the business has access to SFC’s support mechanisms on operating within the regulatory framework in Hong Kong.
“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,” ASIC commissioner Cathie Armour said in a statement.
Information sharing between the two regulators is also accounted for in the agreement. This will enable ASIC to stay on top of regulatory and relevant economic or commercial developments in Hong Kong that could influence Australia’s regulatory approach moving forward, ASIC explained.
The news comes less than a week after Asia Securities Industry and Financial Markets Association (ASIFMA), which represents banks and asset managers, released a research paper stating that rivalry and differing regulatory standards within various jurisdictions are hindering the advancement of fintech in Asia.
Governments in Australia, Hong Kong, Japan, Malaysia, Singapore, and South Korea have all launched initiatives to create a better environment for fintech businesses to grow. For example, ASIC released its regulatory sandbox policy in December to allow fintech businesses to test certain products or services for a limited period of time without having to hold an Australian financial services or credit licence.
However, the fintech industry as a whole is yet to reach a balance between encouraging fintech innovation and ensuring customer protection, according to the paper released by the Hong Kong-based financial lobby group.
“In drafting the principles, we recognised that regulators need to maintain a delicate balance between encouraging fintech innovation and growth on the one hand, and ensuring system and customer protection on the other,” Hannah Cassidy, a partner at law firm Herbert Smith Freehills, which contributed to the ASIFMA research paper, said in the statement.
“Without that balance, cybersecurity fears could overwhelm fintech growth, particularly when high-profile attacks have already affected even the most critical and well-protected financial system.”
ASIFMA advised regional regulators to coordinate better and adopt a consistent set of best practices to foster innovation and boost competitiveness in the region.
“Throughout Asia, there is development at different paces and without much formal cooperation among the markets, so there’s an important and growing need for consistent regulatory standards across all market participants — including incumbents and startups — and increased coordination locally, regionally, and internationally,” ASIFMA CEO Mark Austen said in a statement.
The research paper notes that investors poured $19 billion worldwide into fintech companies — including P2P lenders, blockchain technology firms, and crowdfunding platforms — during 2016.
A recent KPMG report, on the other hand, showed that global fintech investment reached $24.7 billion in 2016, a 47 percent drop from $46.7 billion in 2015.
The Australian and Asian regions, however, trended upwards in 2016 with a record $656 million being invested in fintech in Australia, and a record $8.6 billion being invested in fintech in Asia, thanks to Ant Financial’s $4.5 billion financing, according to the KPMG report.