A regulatory Sandbox is a controlled environment where businesses can live test their innovative financial products, services, business models, and delivery mechanisms while being closely monitored by regulators.
A Sandbox allows regulators to gain a better understanding of the product or service and to determine what, if any, regulation is necessary to protect consumers and the financial system.
For businesses, a Sandbox presents an opportunity for them to test the viability of their product or service on a small scale, and allows them to detect and address any issues before the product or service is offered to a wider audience.
Businesses offer their innovative products and services to the public on a small-scale basis, while being closely monitored by regulators. Regulators keep track of the activity and determine whether the product or service is viable as well as if and how it should be regulated.
Being in the Sandbox allows businesses to discover and address any regulatory concerns early in the life of the product or service, thereby avoiding the possibility of major regulatory issues being discovered after the product or service has been offered on a wider scale.
To be eligible to participate in the Regulatory Sandbox, the product or service being offered by the business:
Yes. Businesses hoping to participate in the Regulatory Sandbox are required to pay the applicable fees, which will be used to cover regulatory and administrative costs.
The application process includes two major steps. The business must:
The duration of a business’ participation in the Regulatory Sandbox will be determined by a Regulatory Review Panel (RRP) based on the nature and complexity of the product or service.
Based on issues or concerns that emerge during testing, the RRP may extend the time beyond what was originally anticipated. A business can also request to have the time extended.
Once a business has successfully completed testing in the Sandbox, the RRP will issue a report that outlines how the product or service performed during its participation in the Regulatory Sandbox.