[Newsflash n. 68]
Following to the introduction in Italy of the notion of regulatory sandbox by the Law Decree n. 34/2019 (“Growth Decree”, as modified by the Law n. 58 of 2019), the Italian Ministry of Finance (“MEF”) submitted to public consultation a Draft Regulation to establish the criteria to use sandboxes and to regulate the FinTech Committee.
The Draft Regulation is divided in two parts:
- Section I on the FinTech Committee, in charge of identifying goals, defining strategies and fostering the development of FinTech, also through the reduction of administrative burdens, the adoption of guidelines and best practices, and the facilitation of contacts between the industry, institutions and authorities.
- Secion II on the testing of FinTech initiatives in a Sandbox environment.
In particular, Section II sets out:
- scope: Sandbox regime may concern an activity that falls, alternatively, under one of the following cases:
a) an activity subject to authorization or registration requirements by a supervisory authority;
b) even if in principle subject to authorization or registration requirements by a supervisory authority, the activity does not require to be authorized because: i) it is not carried out on a professional basis; ii) it is not carried out towards the public or is carried out towards a limited number of people; iii) it falls under an exemption set out by the law;
c) the activity consists of a service to be performed towards a regulated entity and involves banking, financial or insurance regulatory aspects;
d) the activity is carried out by a regulated entity and involves banking, financial or insurance regulatory aspects;
- requirements: among the prerequisites to apply for a Sandbox, the key requirements concern the innovative impact of the relevant initiative at regulatory and project level. As an example, projects shall be characterized by:
a) the use of technologies contributing to the innovation of banking/financial/insurance products and services;
b) the need to act in derogation of regulatory provisions;
c) the added value under one of the following perspective: i) benefits for end users in terms of quality of the service, competition, accessibility, availability, users’ protection or costs; ii) efficiency of the financial system; iii) low costs or more effective application of financial regulation;
d) economic and financial sustainability or adequate financial coverage;
- application: entities shall file a specific application with the relevant supervisory Authorities (Consob, IVASS, Banca d’Italia). In case of a positive evaluation, the Authority will authorize the test, specifying (i) the way and duration of the Sandbox, (ii) the provisions of law or guidelines that can be disapplied, (iii) measures to be adopted to avoid potential risks for clients and (iv) the reporting duties towards Authorities and clients.
- timeframe: the testing period will have a duration of no more than 18 months, which may be extended.
- monitoring activity: the relevant supervisory authorities shall carry out an on-going supervision during the testing period and they will have to report to the FinTech Committee at least once every six months together with the end of the testing period.
- registration: the entities admitted to the Sandbox will have to enroll in a register held by the FinTech Committee.
Comments to the Consultation can be submitted no later than 19 March 2020.
Please feel free to contact us should you wish our assistance to prepare and submit your comment to the Consultation and for any other clarification on this topic.