IOSCO Growth and Emerging Markets Committee consults on its recommendations related to the use of innovation facilitators

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The IOSCO Growth and Emerging Markets Committee (GEMC) is requesting feedback on proposed recommendations related to the use of innovation facilitators in growth and emerging markets.

The Consultation Report onThe Use of Innovation Facilitators in Growth and Emerging Marketscovers three types of innovation facilitators: innovation hubs, regulatory sandboxes, and regulatory accelerators. The Consultation Report proposes four recommendations for emerging market member jurisdictions to consider when setting up innovation facilitators.

Dr. Mohammed Omran, Chairman of the Financial Regulatory Authority of Egypt, and GEMC Chair, said, “A regulatory response to financial innovation requires a balanced approach between the potential opportunities of innovation and the risks for investors, the integrity of markets and the stability of the financial system. Setting up innovation facilitators is one way to facilitate the understanding of market trends, assess the need for regulatory changes or adaptation and set a strategy for the sound development of the market, with due regard to these regulatory objectives.”

The proposed recommendations cover four areas:

Considerations prior to the establishment of innovation facilitators;

Definition and disclosure of objectives and functions of innovation facilitators;

Defined eligible entities and the criteria for application; and

Mechanisms for cooperation and exchange of information with both local and foreign relevant authorities.

The report also includes a decision tree for regulators to consider when looking at establishing an innovation facilitator and assessing what type of innovation facilitator to set up.

Ms. Lucía Buenrostro, Vice President of Regulatory Policy, CNBV Mexico and Team Lead of the GEMC Working Group said, “When establishing innovation facilitators, securities regulators and other competent authorities must consider their objectives, the scope of their regulatory framework and their available resources, as well as the ecosystem where the financial innovation is taking place. The recommendations made here contribute to the regulatory development to guarantee investors´ protection,  market integrity and the stability of the financial system.”

Comments may be submitted on or before 6 February 2022 at consultation-07-2021@iosco.org