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The “sandbox” opens its first call for projects: All the keys to being chosen

| News | Regulación Financiera y Fintech

Miguel Prado explains in Confilegal that "for a pilot project to access the sandbox it must be, above all, innovative" and that "it must be a disruptive and/or novel model"

The Spanish fintech sandbox kicked off on Wednesday with the opening of its first call for proposals for projects that want to develop in this flexible regulatory environment. Applications can be submitted until 23rd February.

Miguel Prado, partner of Financial Regulation & Fintech at Andersen, considers that there are formal aspects and others intrinsic to the project to be considered for the application to be processed and for it to have access to the sandbox.

"In terms of form, notwithstanding the standardised model made available to promoters to respond to all the key aspects set out in the regulation, it will be essential that the justification report expands on the information contained in the latter, developing and explaining the content of the project in simple, clear and understandable language for the regulator".

On the approach, Prado believes that "for a pilot project to access the sandbox, it will have to be, above all, innovative".

This means that "the promoter must justify and argue that its business model entails a clear technological innovation factor within the financial sector (either through new applications, processes or products)".

At the same time, it will be necessary to insist that "it is a disruptive and/or novel model, sometimes having to argue for its acceptance due to the absence of other similar models in the market, either by companies in its Group or competitors".

Prado speaks of the minimum functionality, "it will be very important to demonstrate that the project has a certain minimum functionality and degree of progress in order to justify its future viability".

"In this sense, the Regulator is looking favourably on the provision, in the context of the application, of additional (optional) information such as market studies, corporate presentations, commercial documentation, etc., that can justify the viability of the project in the medium/long term".

Another issue he insists on is a clear business model when it comes to justifying the added value required by the standard. "In addition to its innovative nature, the pilot project must provide real utility and/or added value to the financial sector".

Prado stresses that it "facilitates regulatory compliance by improving processes, that it provides mechanisms to improve regulation or the better exercise of financial supervision, that it improves the quality, access conditions and availability of financial services for users and that it increases efficiency for institutions and markets".

This expert also emphasises guarantees. "This is a key issue for the acceptance of the project. The pilot project must establish very clearly the type of guarantees offered to participants, in terms of potential damages suffered during the testing period, as well as the level of confidentiality that could be affected during the tests".

For this lawyer, there are also other issues that can be considered when accepting a request to enter the sandbox, such as "whether the entities in the group are regulated/authorised by other regulators. The fact that the promoter and/or the entities in its group have authorisation is something that the regulator tends to value very positively".

For Prado, "this would imply both prior knowledge of the financial sector on the part of the promoter and sufficient financial means to support the expenses that the project may incur during the testing period, as well as having a shareholder and, where appropriate, a project management team that has been favourably assessed by other regulators (whether in Spain or abroad)".

You can read the full article in Confilegal.

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