The Malta Financial Services Authority thinks that certain changes to the overall structure of the proposed FinTech Regulatory Sandbox is necessary on the basis of feedback it received from industry. Most of the responses received were related to the Sandbox, the main strategic objective in the consultation document.

In the digital economy and the FinTech world, a regulatory ‘sandbox’ refers to a mechanism for developing regulation that keeps up with the exceedingly fast pace of innovation.

It is a form of testing ground for new business models that are not protected by current regulation or supervised by regulatory institutions.

The Pillar 1 FinTech Strategy, focussing on regulation, contains the MFSA’s vision “to establish Malta as an international FinTech hub, which supports and enables financial services providers to infuse technology in product and service offerings to drive innovation”.

It says the big bulk of respondents – 47 per cent – considered its proposals “good”, 33 per cent deemed them “satisfactory” and 20 per cent said they were “excellent”.

With regard to efforts to position Malta as an international FinTech Hub, according to the regulator, the respondents highlighted the fact that the regulatory Sandbox is a must to foster technological developments within the financial services industry while ensuring effective investor protection, market integrity and financial soundness.

Furthermore, those giving their feedback felt that Malta’s small size and diverse demographics can provide FinTech providers with the opportunity to develop their solution effectively.

The respondents are also of the view that, through initiatives such as the Sandbox, the financial services regulator should become an enabler of innovation by supporting market participants to develop technologically enabled financial innovation. Thus, they argue that while effective and efficient implementation of the strategic objectives is necessary, execution needs to follow quickly.

The MFSA also let it be known it will take on board the constructive feedback with regard to RegTech, SupTech, Proportionality and Smart Regulations.

As an annex to the feedback document on the FintTech strategy, the MFSA has also published its proposed ‘Rule’ establishing its FinTech Regulatory Sandbox. This Rule is open for consultation to the public until 7th February 2020, until which date, interested parties are invited to submit their feedback by sending an email to [email protected].