Submitted Abstract
This grant application titled “A New Law for FinTECHs? – The Regulatory Sandbox” seeks to engage in a scholarly exchange, and establish a permanent link between the University of Luxembourg (UL), Faculty of Law, Economics and Finance (FDEF), in particular the ADA Chair on Financial Law, Professor Dirk Zetzsche, and Scientia Professor Ross Buckley of the University of New South Wales (UNSW), Australia, a globally leading FinTECH scholar and the head of the UNSW Digital Financial Services Research Team. Through this link, the UL will have access to FinTECH-related knowledge assembled in Sydney as one of the vibrant FinTECH centres of the world, and which is not accessible through publications. In particular, Australia functions as a role model for regulating FinTECHs, having adopted a ‘Regulatory Sandbox approach’, similar to the UK, yet different to the extent that Australia is not subject to the sometimes burdensome European legislation. Moreover, through visits to FinTECH incubators, the applicant seeks to analyse personally how Australian FinTECH regulation works. The visit to UNSW is crucial for the production of world-class research on such a fast moving topic (at least one comparative paper shall be co-authored with Prof. Buckley, and a couple of others by Prof. Zetzsche alone). The insights will further the research quality of UL’s interdisciplinary FinTECH working group, one of UL’s strategic commitments, as well as increase regulatory expertise and add to Luxembourg’s reputation as a FinTECH centre, in line with the government’s definition of FinTECH as a core priority. FinTECH refers to the use of technology for the provision, and improvement, of financial services. FinTECH is often developed and/or provided by innovative start-ups that enter the market with the aim of taking business from incumbent providers (so-called disruptive models). At the same time, established financial institutions seek to benefit from FinTECH. Examples include the streamlining of clearing and settlement procedures that will change the world for clearing infrastructure providers. As with the business models, the legal models also need to be adapted to FinTECH. This adaption raises three important research questions which the applicant will seek to answer: 1) How should FinTECH innovation be qualified and analysed under existing law? 2) Do new business models require regulation from either a client and/or systemic risk perspective, and if so, how? 3) How do we need to adjust rules for established intermediaries for FinTECH to work smoothly, and, specifically, do we need “A New Law” for FinTECH? In answering these questions we intend to analyse the regulatory sandbox approach, using examples from banking law and payment systems, as well as asset management and investment fund law, as well as the relevant regulatory experiences of Australia and of Hong Kong (through Professor Buckley’s close collaboration with Professor Douglas Arner of the University of Hong Kong and with Janos Barberis, Founder of FinTech Hong Kong).