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1. Introduction

What is a Regulatory Sandbox?

A Regulatory Sandbox constitutes a regulatory regime that provides financial technology firms (FinTechs) a controlled environment to test their innovative financial propositions for a specified period and while formally engaging with the Regulator.

The Regulatory Sandbox does not constitute an unregulated environment and should not be perceived as a testing space where laws and regulations are relaxed. Its scope is to enable market participants and regulators to engage in a conductive dialogue that positively influences regulatory reforms and facilitates the appropriate balancing between financial innovation and risk mitigation.

Introduction to the BoG Regulatory Sandbox: General overview and objectives

In order to facilitate innovation in Greece and construct a regulatory environment that encourages providers to embrace emerging technologies, in accordance with their regulatory obligations and without compromising the stability of the financial system, the Bank of Greece (the “BoG”) has established a Regulatory Sandbox. As such, the BoG Regulatory Sandbox constitutes a ‘mechanism’ that enables participants to carry out small scale testing of innovations, in a controlled regulatory environment, within specified parameters and timeframes whilst formally engaging and directly cooperating with the Bank of Greece. The Executive Committee Act 189/1/14.05.2021 defines the terms and conditions for the establishment and operation of the Regulatory Sandbox.

The primary objectives of the BoG Regulatory Sandbox are to:

Facilitate Financial Innovation and Preserve Financial Stability

The Regulatory Sandbox shall provide a controlled regulatory environment whereby, innovative financial services/products can be made available in the local market whilst preserving the financial stability and effectiveness of the financial system.

Enhance Legal Certainty

The Regulatory Sandbox shall enhance legal certainty and awareness on the application of the existing regulatory framework to innovative propositions within the Greek financial services market.

Build and Promote Knowledge

Through collaboration with Sandbox Participants the BoG will be provided with the opportunity to build its knowledge around financial innovation and inform its regulatory and supervisory approach accordingly.

2. Why join?

What do I gain via the participation in the Bank Of Greece's Regulatory Sandbox?

The Bank Of Greece's Regulatory Sandbox presents eligible participants with an opportunity to collaborate with the Bank of Greece and test the provision of their innovative proposition on a small-scale, allowing them to improve their offering through continuous feedback and address any regulatory concerns in the early stages of their product offering.

3. Should you apply to the Regulatory Sandbox?

Scope and eligibility: Who is eligible for participation?

The BoG Regulatory Sandbox is open to authorised financial service providers that already hold an authorisation from the BoG and are looking to apply innovative, technologically enabled solutions in the provision of financial services that fall under the BoG’s remit. Non-authorised firms, including technology firms will need to either obtain first the appropriate authorisation, if they intend to carry our regulated activities themselves, or forge a partnership with an authorised institution and enter the Regulatory Sandbox together, whereby the main addressee of supervisory competences will be the authorised institution.

In addition, for the applicant to be eligible to participate in the Regulatory Sandbox, their proposed solution shall need to be genuinely innovative or significantly different from those currently available within the Greek market, offer identifiable benefits to the users of financial services and the financial market and be ready for testing in a live environment. Finally, the applicant shall intend to deploy the proposed financial service /product in Greece.

4. The four phases of the Sandbox Process

  • 1 APPLICATION The Bank Of Greece reviews the submitted form and evaluates admission.
  • 2 PREPARATION The Bank Of Greece allows tests to be conducted within the agreed parameters.

Firms interested in participating in the Sandbox shall need to review the eligibility criteria and then fill in and submit their application

The eligibility criteria that applicants shall need to meet are the following:

Proposed solution subject to financial regulation within BoG remit

The applicant shall need to clarify that their proposed solution is subject to financial regulation within the remit of the BoG and refer to how the solution is covered by the applicant’s authorisation and is in line with their statute.

Genuinely innovative service/product

The proposed solution is truly innovative or significantly different from those currently available within the Greek market.

  • The applicant shall need to demonstrate, through desktop research or other means, how their proposition is truly innovative and/or significantly different from those currently available within the Greek market.
  • The applicant shall need to clearly explain how aspects of the proposition to be tested in the Regulatory Sandbox, leverage emerging or existing technology(ies) in an innovative way. However, innovation is not constrained only to the technological elements of the proposition but also looks for organizational, business and/or social innovation.

Benefits to users of financial services and the financial system

The innovative proposition can offer identifiable benefits to the users of financial services and the financial system, either directly or indirectly.

  • The applicant shall need to demonstrate that the innovative proposition can have a positive social impact and offer identifiable benefits to users of financial services and the financial system.
  • The proposed solution is likely to lead to a better deal for users directly or indirectly (i.e. lead to the introduction of services / products that are more effective or of better quality or that may offer better value for money) compared to current products offered in the market.

Service/Product is ready to be tested

The service/product is at a sufficiently mature stage and is ready to be tested in a live environment.

  • The applicant shall need to demonstrate that some initial testing has been carried out to date and/or the applicant has deployed the service or variant in other markets.
  • The applicant shall also need to demonstrate that all appropriate resources (i.e. financial, technical and human capacity), required to support testing in the Regulatory Sandbox are available.
  • The applicant shall mention the efforts carried out thus far to render its proposition compliant with the requirements of applicable legislation and administrative provisions.
  • The applicant shall mention the efforts carried out to comply with industry standards and obtain where applicable, relevant certifications for the proposed solution as a whole or sub-parts of it.

Provider intends to serve domestic market

The applicant shall clearly state their intention to deploy the proposed financial service/product in Greece.

Once the Application form is submitted, a dedicated case officer will be assigned to each Applicant to act as the contact point between the applicant and the BoG.

All submitted applications shall be reviewed by the BoG and propositions that meet the eligibility criteria will be evaluated for admission into the Regulatory Sandbox.

Upon acceptance to test in the Sandbox, eligible participants will work closely with the BoG to decide upon the testing parameters and the boundaries of the sandbox environment, including appropriate risk management measures and risk response implementation plans. In addition, participants will discuss with the BoG any potential terms, restrictions and conditions that must be met prior to testing.

Sandbox participants can proceed with the testing phase and provide their solution in a “live” environment for up to 6 months (with the potential to apply for an extension of up to 6 additional months). Customised Guidance will be provided by the BoG to the participant to facilitate the navigation to and clarification of the applicable legal and regulatory requirements, vis-à-vis the innovative proposition being tested. During this time, participants are expected to co-operate with the authority, whilst the latter exercises its traditional supervisory powers, monitors and oversees compliance with the requirements agreed upon during the preparation phase as well as with the requirements established in legal acts regulating the financial market. Throughout this period, participants will be required to regularly submit interim reports on the progress of the test(s).

Upon exiting the sandbox, the participant shall be required to produce a final report summarizing their findings, the performance of its proposition against the testing objective/s set during the Preparation phase and intended next steps. The participant may proceed to deploy the financial service on a broader scale or terminate the provision of its service.

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