The Dubai Financial Services Authority (DFSA) and the Securities and Futures Commission (SFC) in Hong Kong have signed an agreement to cooperate on Fintech innovation. The two public entities said the agreement will further strengthen the efforts of both authorities to develop an innovations-friendly ecosystem and regulatory environment in their respective markets. This continues a trend by both countries to ink bilateral relationships to boost emerging technology within the financial sector.
The agreement was signed in an event in Hong Kong where Ian Johnston, Chief Executive of the DFSA, and Ashley Alder, Chief Executive of the SFC, formalized the relationship.
Under the agreement, both authorities will share information on developments and innovations in Fintech in their respective markets. The agreement also will encourage both regulators to refer innovative firms to one another’s markets and to provide them with regulatory guidance.
“Providing a regime that fosters innovation in the Dubai International Financial Centre (DIFC), is a strategic priority for us. This agreement with Hong Kong’s SFC deepens cooperation between our two markets and will build a common understanding of the principles of good innovation,” commented Johnston.
Adler said the agreement underscores the SFC’s efforts to strengthen regulatory collaboration and further promote Fintech in Hong Kong.
“We look forward to working closely with the DFSA to support FinTech development in both our markets,” said Adler.
Hong Kong, a global financial center, has been criticized by some as moving too slowly in embracing Fintech. More recently, both government officials and private sector participants have increased activity to establish Hong Kong as a Fintech hub.
This specific agreement extends an existing relationship between the SFC and the DFSA with a joint commitment to maintain standards of cooperation. Both regulators are signatories to the IOSCO Multi-lateral Memorandum of Understanding (MMoU). They also entered into a bi-lateral MoU in 2008.
The is is the latest step in the DFSA’s roadmap to build a framework that supports innovation in the DIFC. It also follows the introduction of regulations formalizing a tailored regime for loan and investment crowdfunding platforms at the beginning of this month. The DFSA was the the first country in the GCC to establish bespoke regulations.
The DFSA’s innovation strategy is aligned with the National Innovation Strategy set out by UAE Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, to make the UAE a global hub for innovation. It follows the launch of the FinTech Hive at DIFC, which will bring together the next generation of leaders and entrepreneurs to compete and address the growing needs of the region’s financial services industry, using innovative technology solutions. This intends to catalyze growth and efficiency in a variety of areas including trade finance, alternative finance and Shari’ah-based services.
On May 24, the DFSA launched its Innovation Testing Licence (ITL), a special class of financial services licence that allows Fintech firms to develop and test innovative Fintech concepts from the DIFC.
The SFC established the FinTech Contact Point (FTCP) in March 2016 to enhance communication with businesses involved in the development and application of FinTech and regulatory technology in Hong Kong. The FTCP also facilitates an understanding of the SFC’s current regulatory regime while enabling it to stay informed of the development of the local industry.