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The influential financial regulators from Japan and the United Kingdom have ‘exchanged letters’ toward jointly promoting innovation of Fintech or financial technology. The collaboration will also provide guidance and support for FinTech businesses and startups to enter each other’s markets.
Announced today, the UK’s Financial Conduct Authority (FCA) and the Financial Services Agency of Japan (FSA) agreed toward the Exchange of Letters (EoL) that will establish a framework for cooperation and referrals between the two countries.
Fundamentally, the EoL agreement is designed toward respective regulators in both countries supporting FinTech businesses when trying to enter each other’s markets. Innovative businesses will seek entry through a regulatory referral system. Regulatory uncertainties will be reduced, as would the time required to enter the other market.
Collectively, the burden for companies and startups from both countries to enter each other’s markets amid new jurisdictions will be reduced.
Signed by Christopher Woolard, director of strategy and competition at FCA & Shunsuke Shirakawa, the vice commissioner for interntional affairs at the FSA, the two letters can be found here and here [PDFs] respectively.
“For Japan, this Exchange of Letters will encourage Japanese startup companies to engage with innovative financial businesses globally and will attract UK companies to the Japanese market and contribute to stimulating the economy, “ reads an excerpt from Japan’s FSA of the joint-announcement.
In statements, Shirakawa said:
This is our first case in creating a pro-Fintech Co-operation Framework with any other country. UK is one of the world-leading FinTech countries, generating £6.6 billion in revenue. We believe that this Exchange of Letters strengthens the relationship between the JFSA and the FCA and promotes innovation in our respective markets.
In the UK, the FCA “has an overarching statuatory objective as a regulator to make financial services markets work well and promoting competition” adds a press release by the agency.
Chris Woolard of the FCA added:
We are committed to encouraging innovation that has the potential to be of benefit to consumers using financial services here in the UK. Today’s Exchange of Letters with the JFSA will help break down barriers to entry both in Japan and in the UK for firms with interesting new business services and products.
For the FCA, the agreement with Japan joins a number of other international collaborations for the world’s leading Fintech hub. Earlier this year, the UK regulator shook on an agreement with its counterpart in Canada toward Fintech expansion of startups in each other’s countries. In December 2016, the FCA signed a similar agreement with Hong Kong.
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