Spanish Ministry of Economy and Enterprise publishes the 'draft Law on the digital transformation of the financial system'
The Spanish Ministry of Economy and Enterprise has published a draft Law on the digital transformation of the financial system' ("anteproyecto de Ley de transformación digital del sistema financiero"). This draft includes the future regulation of 'sandboxes' in Spain, which are defined as a controlled environment for testing innovative financial products based on new technologies.
The draft Law is open to public consultation for all interested parties, including all sorts of organisations, individuals and Public Authorities. The consultation is open until 7 September 2018.
According to the draft Law, the execution of a 'sandbox' exercise will be governed by two layers of rules. The framework rules set forth the draft Law itself, and also a specific Protocol that will be prepared by the relevant Supervisor, including specific requirements for each individual 'sandbox' exercise.
In relation to the functioning of the 'sandbox' the draft Law sets forth three main requirements that all 'sandboxes' will have to comply with: (i) the relevant Regulator will oversee the 'sandbox' and its developments; (ii) the scope, duration and characteristic of the 'sandbox' will be limited in advance; (iii) the 'sandbox' will offer maximum guarantees.
Regarding the access regime, the different companies can submit their applications through the Secretariat of the General Treasury and International Financing website, who will allocate these applications to the relevant Regulator Financial Supervisory Authorities. This is, the Central Bank of Spain, National Stock Market Commission and the General Insurance and Pension Funds Directorate. These Regulators will be responsible for analysing and evaluating the proposed projects.
At the end of the sandbox exercise, a final report including the results of the project shall be submitted to the Regulators. After the finalization of the 'sandbox' or even during the exercise, companies can apply for the relevant license or for its extension if they already have one. In this case, the license will be granted through a simplified process when no license exists for the kind of activity developed, if the testing phase makes it possible to perform a simplified analysis of the fulfillment of the requirements for such authorisation.
In addition, the draft regulation contains other supportive measures of the digital transformation, such as the establishment of reliable and efficient lines of communication between the Public Authorities and the Private Sector.
With these measures, Spain intends to join the leading jurisdictions that already have similar systems to favour the innovation process and support the digital transformation of the financial system.
