FCA and CFTC Enter Into Cooperation Agreement on FinTech

On February 19, the UK’s Financial Conduct Authority (FCA) and the United States Commodity Futures Trading Commission (CFTC) (collectively the Regulators) published a press release announcing that they have signed a Cooperation Agreement on the same date with each other on financial technology (FinTech) innovation.

The Cooperation Agreement aims to:

  1. foster the use of technology for more effective and efficient regulation and oversight of financial markets and participants (RegTech);
  2. enhance the sharing of information (e.g., market developments and trends) between the Regulators, with a view to fulfill their respective regulatory mandates and advance the understanding and utilization of FinTech and RegTech in the United States and UK; and
  3. facilitate the referral to each other of UK and US FinTech companies interested in entering each other’s market.

The support offered by the Regulators includes, but is not limited to:

  1. helping FinTech companies understand the regulatory framework in the relevant Regulator’s jurisdiction and the potential application of the regulatory framework to the relevant FinTech business;
  2. assisting FinTech companies with the pre-authorization application phase by discussing the application process and any regulatory issues that have been identified;
  3. allocating staff from each Regulator to provide guidance with respect to the Regulator’s authorization application; and
  4. assisting with enquiries that identify ambiguity in existing rules or regulations that may hinder beneficial innovation.

The Cooperation Agreement is the first agreement of its kind between the CFTC and a non-US counterpart. CFTC Chairman J. Christopher Giancarlo stated that the FCA’s FinTech initiative, Project Innovate, is the “gold standard for thoughtful regulatory engagement with emerging technological innovation” and that the Cooperation Agreement demonstrates the Regulators’ “cross-Atlantic commitment to facilitating market-enhancing innovation and sharing best practices in FinTech engagement.” FCA Chief Executive Andrew Bailey also noted that the Regulators will be hosting a joint event in London to demonstrate how firms can engage with them, details of which have yet to be announced.

The press release is available here and the Cooperation Agreement is available here.

©2023 Katten Muchin Rosenman LLP
National Law Review, Volumess VIII, Number 55