On Financial Regulatory Sandbox

The deep integration of finance and technology configurates the main development path of financial innovation since the subprime mortgage crisis.While the long-term cyclical state of "deregulation-strengthening supervision-deregulation-strengthening supervision" has long been presented by financial supervision,resulting to the evolution of "deepening-restraining-deepening-restraining" in financial innovation and the repeated protection behavior of"neglecting-prioritizing-neglecting-prioritizing" by financial consumers.Thus,people are once again aware of the deep integration of finance and technology that is urgently need to be put into practice.At this time,a regulatory system that can coordinate the long-standing complex relationship between the regulatory authorities,financial institutions and financial consumers and promote the dynamic balance of the values of safety,efficiency and fairness has become the exploration direction of the international community in the long run.Based on experimental thinking,the financial regulatory sandbox is full of balanced art.It not only can ease the contradictions between legal lag and innovation advancement and coordinate the relationship between innovators and regulatory departments,but also can promote the protection mechanism of financial consumers in terms of ideas and systems.Undoubtedly,it fits well with the previous demands of the international community,thus becoming popular in the world.Starting from the basic problems of financial regulatory sandbox,this thesis makes full analysis on the constitutive elements of financial regulatory sandbox and potential problems in the sample countries(regions).It makes good use of local resources,proposing reasonable advice for the financial regulatory sandbox framework.The full text which is divided into three parts includes introduction,main text and conclusion.The main body consists five chapters,discussing the basic theory and development of financial regulatory sandbox,the constitutive elements and problems in the access stage,the operational phase and the exit phase,and the localization of financial regulatory sandbox.The first chapter mainly explains the basic theory and development of financial regulatory sandbox.On the basis of three basic logical starting points of financial supervision,financial innovation and financial consumer and the source of "sandbox",the thesis indicates that financial regulatory sandbox makes advance tests on the financial innovations that have not yet met all regulatory conditions by setting a "safe space" embedded in the real market.Therefore,financial regulatory sandbox is experimental,specific,participatory and balanced.The sociological jurisprudence and economic analytical jurisprudence in the field of legal philosophy and the game theory of economics provide a solid theoretical basis for it.In balancing financial equity,safety and efficiency and coordinating the tripartite relationship between regulatory departments,financial institutions and financial consumers,financial regulatory sandbox has greatly contributed to its rise in the world and the emergence of "oficial sandbox","agent sandbox","industry sandbox","business sandbox","domestic sandbox" and "international sandbox" and other types of sandbox from different perspectives.However,it also has the problem of accuracy associated with its experimental nature,as well as the adaptive challenges of the new relationships between the various subjects in the sandbox field.At present,financial regulatory sandbox has been prospered at the local levels in China.A detailed analysis of the specific structure of financial regulatory sandbox in the sample countries(regions)will undoubtedly contribute to the early formation of the system at the national level in China.The second chapter analyzes procedural and substantive requirements of financial regulatory sandbox in the access stage in sample countries(regions)with the aim to explore their common elements.On the procedural side,the sample countries(regions)have reached the agreement on the core elements of three due procedures of"excluding prejudice,taking advice and giving reasons";on the entity side,it facilitates the financial regulatory sandbox test to the utmost extent as a common standard for access on the premise of preventing and controlling risks,protecting consumer rights and interests and preventing any participation with the aim to mitigate risks.At the same time,from the perspective of government failure,it analyzes the inequity of innovators and financial consumers that may exist in the access process of financial regulatory sandbox.Moreover,three feasible paths of proposing information disclosure,setting prepositive selection procedures of consumers and strictly controlling the procedures of sandbox authorities have been released.The third chapter principally compares and analyzes three elements in the sample countries(regions),namely the specific exemption method of financial regulatory sandbox in the operation stage,the information exchange mechanism and the medium-term alteration mechanism.The legal and compliant basic standards lay the foundation for the overall setting and exemption of the regulatory sandbox,carrying out the work without conflicting with the existing legal framework and within their own extent of competence.By implementing the established plans and dealing with emergencies in a good manner,requirements of regular reports and frequent information communications have been realized;While the accuracy and effectiveness of the test results make requirements on major alterations of the mid-term changes of the time,customer,exemption conditions and the tested products or services in operating the sandbox.In the meantime,due to the information superiorities of innovators on their innovative products or services,the thesis has made concrete analysis on the adverse factors and moral hazards that are easily caused and the issues that affect the transparency of the regulatory sandbox,and then proposes corresponding solutions.The fourth chapter compares and analyzes the constitutive elements of the withdrawal stage of financial regulatory sandbox in the sample countries(regions).In the context of this thesis,the elements involve three aspects of the exit mode,the behavior of the sandbox entity after withdrawal and the evaluation mechanism after legislation.Among them,the exit mode includes the normal exit according to the established test plan and the abnormal exit implemented by the sandbox authorities based on closing the sandbox test at any time;the behavior of the sandbox main body after exiting mainly shows that the sandbox authorities learn from the test results to make more timely and appropriate modification on relevant rules,and the tested subjects place tested products or services beyond the sandbox according to the current promotion plan and their current qualifications.The sample countries(regions)have more or less made provisions on the above-mentioned contents,but without stipulating the evaluation mechanism after legislation that can measure the legislative quality and implementation effect of financial regulatory sandbox.This chapter establishes the general assessment framework based on the characteristics of financial regulatory sandbox.In the fifth chapter,given that the construction of financial regulatory sandbox can optimize China's financial supervision mode and promote protection concepts and revolution on methods of China's financial consumers,on such basis,this thesis points out our current thinking adapt stability,the compatibility of institutions and the legality of regulations.All these have laid a solid foundation for development.In addition,general recommendations are proposed from the basic arrangements such as concepts,principles,purposes,power subjects,and the framework of implementation systems in the access stage,operation process and end phase,in order to give reference to build the contents of financial regulatory sandbox for China's central and local authorities and the authorized entities.