The FinTech Regulatory Sandbox Guidelines

Editorial Staff Regulations, Technology

With the aim of transforming Singapore into a smart financial centre, the Monetary Authority of Singapore (MAS), recently published the FinTech Regulatory Sandbox Guidelines.

MAS had issued a consultation paper on June 6, 2016. This paper proposed to ease the regulatory requirements that FinTech companies require when testing innovative financial products and services regulated by the MAS. Taking the feedback received from the public consultation into account, the MAS has now published the final regulatory guidelines. These guidelines relax the regulatory and legal requirements applicable to FinTech players who are looking to experiment and implement innovative financial services in Singapore.

The Singapore government introduced these guidelines with the aim of attracting FinTech startups to the country extending the case of why startups should choose Singapore. The guidelines highlight how Financial Institutions (FIs) and startups can test their financial services and products within a regulatory sandbox. However, the MAS will review every application before the applicant can proceed with the regulatory sandbox.

The Regulatory Sandbox

In the words of Ms Jacqueline Loh, the Deputy Managing Director of MAS, “The regulatory sandbox provides a conducive environment where regulatory requirements will be relaxed to enable firms to experiment with promising innovations within boundaries.”

This approach is beneficial since FIs and startups do not have to give up promising innovations on the ground that they are unsure of complying with the legal and regulatory requirements.

The guidelines released by the MAS outlines the key stages starting from the application for the sandbox till the exiting of the sandbox.

Relaxing Regulatory Requirements

MAS has stated that it will relax regulatory requirements to the successful applicants of the Sandbox. The guidelines highlight the regulatory requirements that MAS can consider relaxing.

These include:

  1. Asset maintenance requirement;
  2. Board composition;
  3. License Fee;
  4. Fund solvency and capital adequacy;
  5. Credit rating and
  6. Cash balances.

Key Stages of the Sandbox

Application Stage

The applicant will submit the sandbox application to the MAS who then reviews the application and informs the applicant about its suitability within a period of 21 days.

Evaluation Stage

If the applicant is potentially suitable for the sandbox, the MAS will assess the application. After evaluation, the MAS will inform the applicant in writing whether or not to proceed with the sandbox.

Experimentation Stage

Once an application is approved, the sandbox is launched into the experimentation stage where the sandbox entity must inform its customers that the financial service is operating in a sandbox and disclose the risks associated with it. It is necessary for the entity to obtain an acknowledgement of the customers stating that they have understood all the risks.

Evaluation Criteria

An applicant must fulfill the evaluation criteria highlighted in the guidelines which include the following:

  1. The proposed financial service uses a new technology, an emerging technology or any existing technology in a new way;
  2. The proposed financial service addresses certain issues or brings benefits to consumers or to the industry;
  3. After exiting the sandbox, the applicant intends to deploy the proposed financial service in Singapore on a broader scale;
  4. The test scenarios and expected outcomes of the sandbox experimentation should be clearly defined, and the sandbox entity should report the test progress to the MAS from time to time;
  5. The appropriate boundary conditions should be clearly defined;
  6. The applicant must assess and mitigate the significant risks arising from the proposed financial service and
  7. An acceptable exit and transition strategy should be clearly defined if the proposed financial service has to be discontinued, or proceeds to be deployed on a broader scale after exiting the sandbox.

Exiting the sandbox

Once the sandbox period is over the sandbox entity must ensure that it will deploy the financial services that it experimented on a broader scale in Singapore. Additionally, on expiry of the sandbox, the relaxation in the legal and regulatory requirements extended by the MAS will come to an end.

Additional details of the regulatory guidelines and application process can be found here.

Promising Clarity, Flexibility & Transparency

The MAS states that the regulatory sandbox guidelines will achieve the following:

  1. Improved Clarity – The guidelines include examples and elaborations stating MAS’ expectations such as the evaluation criteria for entry into the sandbox;
  2. Greater Flexibility – The guidelines extend greater flexibility and relax the evaluation criteria for firms who wish to enter the sandbox, and allow room for adjustments during experimentation as firms learn from market responses; and
  3. Increased Transparency – MAS will work closely with sandbox applicants starting from the evaluation up to the experimentation process. Additionally, MAS will publish information about the sandbox applicants on its website.


With the introduction of the regulatory sandbox guidelines, it can rightly be said that the MAS recognises the importance of innovation in the financial services industry in Singapore. Additionally, Ms Jacqueline Loh, the Deputy Managing Director of the MAS states that these guidelines reflect MAS’s commitment to building a smart financial centre where innovation is pervasive and technology is used widely.