The UK’s Financial Conduct Authority (FCA) and its Hong Kong equivalent, the Securities and Futures Commission (SFC) have signed a co-operation agreement that will promote information sharing between the two regions, and introduce a referral system that will make it easier for approved, UK based fintech startups to set up operations in Hong Kong, and vice versa.
The agreement will allow the two regulatory authorities to exchange information regarding innovation within the financial services industry, and attempt to eliminate barriers to entry in other countries to give innovative startups a better chance of scaling their services internationally.
The CEO of SFC, Ashley Alder, commented on the agreement that it “will help both regulators to stay abreast of innovation in financial services while providing innovative Fintech firms seeking to develop and grow their businesses internationally with enhanced channels for communicating with regulators.”
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, also commented: ““Cooperation agreements are absolutely vital in fostering an environment of Fintech innovation on a global scale.”
Which must be why the FCA are signing so many. In December last year, the FCA signed a similar agreement with the Hong Kong Monetary Authority (HKMA), and also have agreements in place with the Financial Services Agency of Japan, as well as international authorities in Australia, Singapore, South Korea and China.
The UK’s emergence as a global Fintech hub has a lot to do with the way its regulatory bodies have taken innovation in their stride. As far back as October 2014, the FCA launched “Project Innovate” which is led by the organisation’s Innovation Hub.
The HKMA has now followed suit, launching a Fintech Facilitation Office (FFO) to aid the fintech system in Hong Kong, and promote the region as one of Asia’s premier fintech hubs.
Indeed, Asia’s Fintech scene is exploding and threatening both the UK’s status as the world’s leading Fintech hub, as well as the United States’ position as the largest destination for venture capital investment.
According to a recent report from KPMG, Fintech investment fell in both the US, from US$27 billion, to US $12.8 billion, whilst in Europe, M&A and VC deal value fell from $10.9 billion in 2015, by 80%, to $2.2 billion.
In Asia, meanwhile, total investment was on the rise, to $8.5 billion in 2016.