On the back of a one month consultation on the proposed structure, Bank Negara Malaysia, Malaysia's Central Bank, has issued details of a new Regulatory Sandbox Framework. 

As with other locations the regulatory sandbox will enable the experimentation of fintech solutions in a live environment, subject to appropriate safeguards and regulatory requirements. Malaysia has a fertile and growing fintech scene and the new sandbox will undoubtedly attract more innovation and investment.  

The Ubiquitous Sandbox

finews.asia has reported on the jurisdictions across the region and beyond who have been quick to encourage financial technology innovators with Singapore,Thailand Australia and Hong Kong all announcing «Regulatory Sandbox Initiatives» in recent months. 

After receiving substantial feedback and suggestions from financial institutions, fintech companies, associations and other corporates, Bank Negara Malaysia expanded the eligibility criteria to clarify the focus of innovations that the sandbox aims to support. The Framework will take effect immediately and is now open for application.

To utilise the sandbox Bank Negara stresses that potential financial technology innovations should have clear potential to:

  • improve the accessibility, efficiency, security and quality of financial services;
  • enhance the efficiency and effectiveness of Malaysian financial institutions’ management of risks; or
  • address gaps in or open up new opportunities for financing or investments in the Malaysian economy.

Ready For Testing 

The minimum standards and requirements for participation in the sandbox were also reviewed to encourage wider participation of fintech companies.

Applicants to the sandbox should be able to demonstrate that a product, service or solution has been developed to a functional stage and is ready for testing. The applicant must also have a good understanding of risks during testing, with adequate resources committed to effectively manage the risks.

The Bank will inform applicants of their eligibility to participate in the sandbox within 15 working days of receiving a complete application. This will be followed by preparatory engagements between the Bank and the applicant prior to testing.