Reply to Parliamentary Question on projected economic benefit to Singapore from recent FinTech Co-operation Agreement with India
QUESTION NO 3443
NOTICE PAPER 1389 OF 2022
FOR WRITTEN ANSWER
Date: For Parliament Sitting on 04 October 2022
Name and Constituency of Member of Parliament
Mr Desmond Choo, MP, Tampines GRC
To ask the Prime Minister in light of the recently signed FinTech Co-operation Agreement with India’s International Financial Services Centres Authority (a) what steps will the Ministry be taking to facilitate the entry of India-based fintech companies into Singapore; (b) what is the projected economic benefit to Singapore’s economy in terms of local investments and job opportunities; and (c) whether and, if so, what other jurisdictions does the Ministry intend to invite to participate in the proposed Global Regulatory Sandbox.
Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:
1. The FinTech Cooperation Agreement signed between the Monetary Authority of Singapore (MAS) and India’s International Financial Services Centres Authority (IFSCA) on 18 September 2022 aims to support experimentation and adoption of new financial products or services, and potentially enable cross-border testing with industry players in both jurisdictions. It does so by leveraging the regulatory sandboxes of both authorities.
2. The agreement also provides for a broader global regulatory sandbox arrangement that caters to use cases which may involve other jurisdictions, beyond Singapore and India. Such an arrangement, with India and any other jurisdiction in future, should enable faster time to market, particularly for products and solutions with cross-border applications.
3. Under the agreement, a Singapore-based FinTech company interested in providing innovative financial services in India can reach out to MAS for referral to IFSCA. India-based FinTech companies can similarly benefit from this collaboration by reaching out to IFSCA for referral to MAS. The coordination between the two regulators allows the FinTech companies to apply for admission to the respective sandboxes, without the need to incorporate a business in the other jurisdiction before they are admitted to the sandbox.
4. Similar to other applications to the local regulatory sandbox, MAS will assess any application under the agreement, and perform the necessary due diligence on the FinTech company and its proposal. For successful applicants, MAS will work with the FinTech companies on agreed sandbox boundaries within which the companies can conduct market trials of their products or services. MAS may also require the FinTech companies to put in place safeguards to contain risks arising from possible failure of the product or service.
5. If the sandbox experiment is successful, the FinTech company can exit the regulatory sandbox and offer the new product or service as a fully regulated financial services activity. To do so, they must of course fully comply with the relevant legal and regulatory requirements and obtain the relevant licenses.
6. The MAS FinTech regulatory sandbox has in fact helped FinTech companies and MAS better understand both the benefits and risks of new products and innovations. It has also enabled the sandbox companies to validate the market potential for their new products and services. We have seen some companies in Singapore emerging from the sandbox to become fast-growing startups.
7. As I mentioned, the agreement also provides for the involvement of additional jurisdictions, as part of the global regulatory sandbox arrangement. This will depend on the specific target markets of sandbox use cases, and whether the relevant jurisdiction has a regulatory sandbox regime to facilitate testing of these use cases.