The Financial Services Agency of Japan (JFSA) and the UK’s Financial Conduct Authority (FCA) have announced a “Co-operation Framework” to support innovative Fintech firms. This “Exchange of Letters” between the JFSA and the FCA is intended to provide a regulatory referral system for “Innovator Businesses” from Japan and the UK seeking to enter the other’s market.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, explained that his agency was committed to encouraging innovation within the financial services sector as it benefits consumers in the UK.
“Today’s Exchange of Letters with the JFSA will help break down barriers to entry both in Japan and in the UK for firms with interesting new business services and products,” said Woolard.
According to the FCA, the authority that receives an Innovator Business referral will provide support to the Innovator Businesses by reducing regulatory uncertainty and time to market. The Exchange of Letters will also encourage the regulators to share information about financial services innovation in their respective markets, reduce barriers to entry in a new jurisdiction and further encourage innovation in both countries.
The FCA is unique in the fact is has a statutory objective as a regulator to make financial services markets work effectively. Promoting competition through innovation forms a vital aspect of engendering efficient financial services. The Exchange of Letters is said to provide invaluable knowledge to UK firms hoping to enter the Japanese market and assist non-UK innovators interested in entering the market the FCA oversees.
For Japan, the understanding will encourage Japanese startup companies to engage with innovative financial businesses globally and will attract UK companies to the Japanese market and contribute to stimulating the economy.
Shunsuke Shirakawa, the Vice Commissioner for International Affairs at the JFSA, noted this was his agency’s first pro-Fintech cooperation agreement with any other country.
“The UK is one of the world-leading Fintech countries, generating £6.6 billion in revenue. We believe that this Exchange of Letters strengthens the relationship between the JFSA and the FCA and promotes innovation in our respective markets,” stated Shirakawa.
The UK has formed numerous international partnerships as it seeks to empower innovation while maintaining its preeminent position in the Fintech sector.
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