The initiative, set to run from January to July 2025, aims to foster innovation by allowing businesses to trial new ideas within a monitored environment. The results of the pilot will inform the FMA's decision on establishing a permanent regulatory sandbox later in 2025.
The sandbox is open to all sectors under the FMA’s jurisdiction, including startups and established market players. It also extends to unregulated areas such as compliance simplification tools, blockchain-based solutions, and regulatory technologies. Participants can test their offerings while gaining clarity on regulatory expectations, enabling adjustments before a full market launch, which could reduce costs and improve market readiness.
For the FMA, the sandbox provides an opportunity to evaluate the benefits and risks associated with financial innovation. Insights gained during the pilot are expected to help the regulator address supervisory challenges more effectively and identify gaps in investor and consumer protection. This proactive approach aims to ensure that regulatory frameworks evolve in tandem with emerging technologies.
The pilot has been developed in collaboration with FintechNZ, whose support and feedback were instrumental in shaping the initiative. Firms interested in participating are encouraged to submit expressions of interest during the six-month testing window. The FMA is also accepting applications from companies planning to bring products to market beyond this period, offering a broader view of future innovation demand.
Applicants must meet specific criteria to qualify for the sandbox. These include having a product ready for testing in New Zealand, understanding the regulatory implications of their offering, and identifying areas where FMA guidance is required to advance their market plans. The FMA will assess whether the barriers faced by applicants fall within its scope of influence and if the product is suitable for the sandbox environment.
By launching this pilot, the FMA seeks to balance promoting innovation with maintaining robust consumer protections and regulatory standards. This initiative marks a significant step toward fostering a dynamic and resilient financial ecosystem in New Zealand.
At the end of November 2024, the API Centre announced that Aotearoa New Zealand reached the second implementation milestone in its Open Banking rollout.
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