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MAS launches Sandbox Express for faster market testing of innovative financial services

THE Monetary Authority of Singapore (MAS) on Wednesday launched Sandbox Express to provide firms with a faster option to test innovative financial products and services in the market.

Eligible applicants can begin market testing in the pre-defined environment of Sandbox Express within 21 calendar days of applying to MAS, instead of taking a longer time to customise their sandboxes under the existing fintech regulatory sandbox, the authority said in a press statement. 

Under the current fintech regulatory sandbox, approval involves a two-stage process, a MAS spokesperson told BT on Wednesday. 

Firstly, applicants will be informed of the potential suitability for a sandbox within 21 working days. This is then followed by final approval to operate in the sandbox.

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"As each sandbox experiment has its own business, technical and regulatory complexities and risk considerations, the time taken for final approval for each customised sandbox is unique to the sandbox application. To-date, the final approval requires at least three months."

Essentially, Sandbox Express shortens the approval process for entry into the sandbox by relying on standard disclosures and pre-determined rules. Hence, Sandbox Express is only suitable for activities where the risks are low, and well-understood by the market, and can be reasonably managed within pre-defined parameters, MAS said. 

MAS released a consultation paper on this scheme in November last year. It noted then that it will assess applications for the Sandbox Express on only two criteria: technological innovativeness of the financial service, and fitness and propriety of the applicant's key stakeholders.

The fintech regulatory sandbox that has been operational since 2016, remains open for applicants with more complex business models, or where MAS requires more time to understand the risks of the activities, it said on Wednesday.

As a start, Sandbox Express will be available specifically for insurance brokers, recognised market operators, and remittance businesses. Each sandbox will also have pre-defined boundaries, regulatory reliefs, and expectations, MAS said. 

"Firms must comply with all conditions of approval, including providing clear and proper disclosure to the customer, as well as submitting regular progress reports to MAS."

Experiments can remain in Sandbox Express for up to nine months. This will provide firms with more time to overcome business and technical challenges during experimentation, and for MAS to address potential regulatory challenges. Companies could also use the longer duration to better prepare for exiting the sandbox, and deploying their innovation on a larger scale, MAS explained. 

In comparison, the sandbox duration under the existing fintech regulatory sandbox is fully customisable. To-date, the approved sandbox period ranges from six months to a year. 

Sopnendu Mohanty, chief fintech officer at MAS said: "For innovation to take root, it is important for ideas to be tested quickly, and in a safe environment. Sandbox Express aims to achieve this through appropriate disclosures and pre-defined rules.

"This introduction of Sandbox Express builds on the experience we have gained from running the fintech regulatory sandbox, and reflects our commitment to encouraging more experimentation and greater adoption of innovative technologies in the financial sector."

MAS added that it will closely monitor the utilisation of Sandbox Express to ensure that it meets the evolving needs and interests of the financial industry. It will also explore opportunities to expand the range of financial products and services that can be offered through Sandbox Express, it said.