snIP/ITs Insights on Canadian Technology and Intellectual Property Law

Tag Archives: fintech

Government of Ontario Issues Financial Services Report Following Red Tape Challenge: Implications for Fintechs

Posted in Fintech

On August 9, 2017, the Government of Ontario released its report on financial services following the Red Tape Challenge.  This report contains a number of recommendations and action items relating to Fintech:

  • New flexible, innovative provincial financial services regulator – As previously announced, the Government of Ontario is proceeding with its plans to establish a new financial services regulator, the Financial Services Regulatory Authority of Ontario (“FSRA”), which is intended to be a “new, flexible and innovative financial services and pension regulator”, and which will replace existing provincial financial services regulators, including the Financial Services Commission of Ontario
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Bank of Canada Releases Fintech Discussion Paper

Posted in Fintech

In July 2017, the Bank of Canada released a discussion paper outlining a framework for the assessment of risks and opportunities for central banks in connection with Fintech. This paper also more generally explores potential implications of Fintech for central banks, given their mandate over monetary policy, the design and distribution of currency and/or financial stability. … Continue Reading

De-Risking in Financial Services: Perspectives and Implications

Posted in Financial, Fintech

The context of de-risking

In the past decade, the financial services sector across the globe has experienced increased regulatory scrutiny, particularly in the areas of financial crimes, anti-money laundering (AML) and anti-terrorist financing (ATF) regulation.

Financial institutions have generally reacted to the new regulatory environment by bolstering their compliance and risk management divisions with increased budgets and headcounts.[i]  However, as the price and regulatory risk of banking increases, some financial institutions are assessing the cost-benefit analysis of certain activities and are opting, simply, to exit entire product lines or customer segments. This phenomenon is one aspect of what is … Continue Reading

Financial Stability Board Issues Report on Fintech Credit Platforms

Posted in Fintech

On 22 May 2017, the Financial Stability Board (FSB)[1] and the Committee on the Global Financial System (CGFS)[2] released a report entitled “FinTech credit: Market Structure, Business Models and Financial Stability Implications” (the “Report”).  The Report aims to provide an accurate picture of the extent and nature of Fintech credit activity by analysing the functioning of Fintech credit markets, including the size, growth, and nature of such activities, and the benefits and risks of Fintech credit platforms.… Continue Reading

European Banking Authority Publishes Draft Recommendations for Cloud Computing

Posted in Fintech, Regulatory Compliance

In March 2017, the European Commission (EC) issued a public consultation document on Fintech. Cloud computing is a major area covered by the EC request for comment and requires delicate balancing between innovation and risk minimization. On one hand, cloud is an easily scalable and cost effective way for financial institutions to manage their data storage and processing.  However, cloud also presents major banks with increased cybersecurity and compliance risk.  The topic of cloud is particularly relevant because certain Fintech enterprises may not be subject to the same regulatory constraints as major financial institutions.

The European Banking Authority (EBA) published … Continue Reading

European Banking Authority Responds to European Commission Public Consultation on Fintech: Potential Takeaways for Canada

Posted in Big Data, Cybersecurity, Financial, Fintech

In March 2017, the European Commission issued a public consultation document on Fintech.  The goal of the European Commission (EC) document is to further the objective of a digital single market within Europe.  This will be done by supporting the development of digital infrastructure,  improving access to goods and services, and ensuring rules foster technological development.

The European Banking Authority (EBA) published its response to the public consultation in June 2017.  The EBA response is significant because it sheds light on how European banks are approaching the areas of artificial intelligence, roboadvisors, crowdfunding, and big data.  Institutions in other countries, … Continue Reading

“Not There Yet”: Bank of Canada Experiments with Blockchain Wholesale Payment System

Posted in Fintech

The Bank of Canada has issued a report on Project Jasper, its recently completed experiment testing the viability of distributed ledger technology (DLT) as the basis for a wholesale payment system. The experiment was a combined effort by the Bank of Canada and Payments Canada, along with Bank of Montreal, Canadian Imperial Bank of Commerce, HSBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Canada Trust. The experiment revealed that such technology is not more beneficial, at least for now, than the current centralized system of wholesale payments. However, the successful proof-of-concept highlighted best practices for wide-scale … Continue Reading

Australian Regulator Issues Guidance on Use of Distributed Ledger Technology: The View from Canada

Posted in Fintech, Regulatory Compliance

In an effort to help regulated entities and interested parties evaluate whether the use of distributed ledger technology (DLT) would enable them to meet their regulatory obligations and to fast-track its discussions with stakeholders, the Australian Securities and Investments Commission (ASIC) has released an information sheet, “Evaluating Distributed Ledger Technology” (INFO 219), offering guidance for entities licensed by ASIC and start-ups that are “considering operating market infrastructure, or providing financial or consumer credit services” using DLT or blockchain.

Noting the “intense interest in DLT” ASIC is seeing from a wide range of financial services market players in recent … Continue Reading

Blockchain applications may be caught by Ontario’s securities law

Posted in Fintech, Regulatory Compliance

The Ontario Securities Commission (OSC) has issued a press release advising stakeholders that Ontario securities law may apply to any use of distributed ledger technologies (DLT), such as blockchain, as part of financial products or service offerings.

The OSC emphasized that it is keen to support the innovative potential of DLT because, among other things, DLT has the potential to increase transparency and efficiencies in the capital markets. However, because of DLT’s novelty, the OSC encourages business to speak to the OSC about securities law and investor protection requirements that may apply.

The OSC has cautioned that “[p]roducts or other … Continue Reading

Initiatives des Autorités canadiennes en valeurs mobilières sur les Fintech : bac à sable réglementaire et coopération

Posted in Fintech, Regulatory Compliance

Le 23 février 2017, les Autorités canadiennes en valeurs mobilières (ACVM) ont annoncé le lancement d’un bac à sable réglementaire. L’objectif du bac à sable réglementaire est d’appuyer les Fintech en leur permettant de faire une demande à l’organisme de réglementation compétent afin de bénéficier d’une approche plus adaptée en matière de réglementation. Cette approche doit faciliter l’utilisation d’applications, de produits et de services novateurs chez les entreprises au Canada, tout en protégeant adéquatement les investisseurs.… Continue Reading

Canadian Securities Administrators Fintech Initiatives: Regulatory Sandbox and Co-Operation

Posted in Fintech, Regulatory Compliance

On February 23, 2017, the Canadian Securities Administrators (CSA) announced the launch of a regulatory sandbox. A regulatory sandbox aims at supporting Fintech businesses by allowing them to apply to the regulator to benefit from a more tailored approach to regulation that balances the need to facilitate the use of innovative products, services and applications all across Canada with appropriate investor protection.

As a result, the CSA will assess the merits of each business model, on a case-by-case basis, and allow innovative businesses to register or grant them relief from certain requirements to permit them to test their products and … Continue Reading

Partnerships between Banks and Fintech Companies: A Continuing Trend for 2017

Posted in Fintech

Fintech companies are offering game-changing products and services in the financial services sector, responding to customer demand for frictionless technology. Canadian banks are likewise increasingly seeking to offer innovative products and services. In addition to developing such products and services in-house, banks have been partnering with Fintech companies, seeking to leverage their technological know-how and cost-effective offerings.  Fintech companies in turn seek to leverage banks’ customer relationships, their reach and experience and their expertise in compliance and risk management.  Partnerships between Canadian banks and Fintech companies increased in late 2015 and 2016, and this trend is expected to continue. Some … Continue Reading

Fintech Regulatory Developments: 2016 Year in Review

Posted in Fintech, Regulatory Compliance

This year was a tremendously active year for Fintech in Canada and internationally, and 2017 promises to be even more so.  In the Fall of 2016, we co-authored a comprehensive report together with the Digital Finance Institute, “FinTech in Canada: British Columbia Edition” on the state of the Canadian Fintech ecosystem, highlighting a number of the then-current industry and regulatory developments.  As we head into 2017, we provide a brief summary of some of last year’s Fintech regulatory developments in Canada and globally, and some developments to watch for in the upcoming year.… Continue Reading

Ontario Enacts Ban on the Expiry of Rewards Points

Posted in Fintech, Regulatory Compliance

On December 6, 2016, Bill 47 – Protecting Rewards Points Act (the “Act”), amending Ontario’s Consumer Protection Act, 2002 (the “CPA”), received Royal Assent.  The Act was first introduced on October 20 as a private member’s bill.

The primary effect – and stated purpose – of the Act is to prohibit the expiry of rewards points under consumer agreement due to the passage of time. Any provision to the contrary in any consumer agreement will be rendered void, with retroactive effect to October 1, 2016, such that all points purporting to expire after October 1, 2016, will need to be … Continue Reading

US Exploring Special Purpose National Bank Charters for Fintech Entities

Posted in Fintech

On December 2, 2016, the United States’ Office of the Comptroller of the Currency (OCC) announced that it would move forward with considering applications from Fintech companies to become special purpose national banks. The OCC also published a paper discussing the issues and conditions that it will consider in granting special purpose national bank charters (the “OCC Paper”).… Continue Reading

Government of Ontario Announces Launch of Consultations to Cut Red Tape in Financial Services and Insurance Regulation

Posted in Fintech

On December 1st, the Ontario Government announced it was launching consultations seeking public input to identify any “unclear, outdated, redundant or unnecessarily costly” financial services or insurance regulation in Ontario, with the aim to modernize and improve such regulation and achieve a regulatory regime that supports innovation and growth, while at the same time protecting the public interest. These consultations specifically include the following:

  • Provincial credit union legislation
  • Provincial mortgage brokering legislation
  • Provincial loan and trust corporations legislation
  • Provincial insurance legislation
  • the Financial Services Commission of Ontario (“FSCO”) Act.

The consultations come as Ontario is in the process … Continue Reading

Chatbots, Open Data and Sandboxes: Trending Topics from the 2016 Money20/20 Conference

Posted in Fintech

With 10,000+ attendees, including more than three thousand companies from seventy-five countries, Money20/20 is the largest annual global event focusing on payments and financial services innovation. The 2016 conference in Las Vegas this October featured a packed agenda of talks by industry and thought leaders on a broad range of current and emerging Fintech issues, as well as an exhibition area featuring Fintech companies, investors, incubators, venture capitalists, consultants, regulators and lawyers. A team of McCarthy lawyers attended again this year and report back on some of the hottest topics of the 2016 conference: machine learning and artificial intelligence (AI), … Continue Reading

2016 FATF Mutual Evaluation Report for Canada Released: Implications for Canadian Fintechs

Posted in Fintech

The Financial Action Task Force (FATF) released its Mutual Evaluation Report (the “Report”) for Canada on September 1, 2016, outlining its assessment of current anti-money laundering (“AML”) and counter-terrorist financing (“CTF”) measures in Canada. The FATF is an independent inter-governmental body that develops and promotes global AML/ CTF policies and sets global standards. This Report assesses Canada’s level of compliance with the FATF 40 Recommendations and the level of effectiveness of Canada’s AML/CFT regime.

The prior 2008 Mutual Evaluation Report issued by the FATF rated Canada as non-compliant in a number of areas. Since then, a number of amendments to … Continue Reading

FinTech takes flight: Insights from the 2016 Canada FinTech Forum

Posted in Fintech

McCarthy Tétrault was a sponsor of the recent 2016 Canada FinTech Forum held in Montreal on September 20-21, 2016.  Steve Forbes was the conference’s keynote speaker.  McCarthy’s introduced the excellent conference panel on blockchain in the financial services industry, with Haskell Garfinkel (PWC) as moderator and Jerry Norton (CGI UK), Todd McDonald (R3), Sujan Menezes (Microsoft) as co-panelists.  The number of attendees at the conference more than doubled over the 2015 conference, demonstrating the ever-growing level of interest in the nascent FinTech industry for both start-ups and incumbents. Below, we set out a high level summary of some of the … Continue Reading

Thinking of Buying or Selling a Fintech Target? Due Diligence Issues Unique to Fintech M&A

Posted in Fintech, M&A/Finance, Startups, Virtual Currency

Although many of the same considerations related to the acquisition or sale of any technology company apply, regulatory and compliance considerations are key in the fintech space.

Fintech M&A activity, in both the Canadian market and globally, is expected to be on the rise over the next few years. In its 2016 Report, FinTech: Prepare for a Wave of M&A, UK-based investment bank FirstCapital, predicts that fintech M&A deal flow will increase “as financial incumbents look to catch up with widespread innovation from new entrants, the internet majors scale up in financial services and the technology/software majors add new … Continue Reading

U.S. Treasury Issues Marketplace Lending White Paper

Posted in Fintech, Regulatory Compliance

In response to the U.S. Department of the Treasury’s (“Treasury”) July 20, 2015 request for information on online marketplace lending (the “RFI”), Treasury issued its white paper on marketplace lending “Opportunities and Challenges in Online Marketplace Lending” (the “White Paper”) on May 10, 2016. The White Paper outlines the risks and potential of this emerging form of credit, makes specific policy recommendations and identifies certain trends for future monitoring.

The White Paper defines marketplace lending as financial services that use “investment capital and data-driven online platforms to lend either directly or indirectly … Continue Reading

Competition Bureau to Study Fintech Market

Posted in Fintech, Regulatory Compliance

The Competition Bureau announced on May 19, 2016 that it will launch a market study focused on how innovation in the fintech sector is impacting consumers and businesses, with the results intended to be published in the spring of 2017, seeking to determine whether there is a need for “regulatory reform to promote greater competition while maintaining consumer confidence in the sector.”

The announcement cites a report indicating that Canada appears to be lagging other countries in adoption of fintech as one of the reasons for deciding to study the financial services industry.… Continue Reading

McCarthy Tétrault and IP Osgoode Co-host FinTech IP Symposium

Posted in Intellectual Property, Patents, Startups

On March 9, McCarthy Tétrault and IP Osgoode jointly hosted a symposium titled Effective IP Strategy to Drive Innovation in the Financial Services Sector.  This event brought together academics, business people, and lawyers for a discussion of how technological change is transforming the financial service sector and pushing incumbents and disruptors alike to think carefully about their IP strategies.

After introductory remarks from Barry Sookman and Giuseppina D’Agostino, the event set a brisk tempo and covered a lot of ground in two short hours.  The discussion was organized around three panels.

The first panel, moderated by Matt FlynnContinue Reading

Ready. Set. Code! Banks embrace hackathons to spur innovation and source talent

Posted in Intellectual Property

As part of the technological arms race in the financial services sector, banks and other financial institutions are increasingly embracing hackathons as a way to innovate consumer products and banking tools. These types of events can help spur innovation, engage potential employees, and produce valuable digital assets for the hosting firm.  However, at the same time, companies should be cautious about the intellectual property issues at stake.

A “hackathon” is a software coding competition that happens over a short period – usually a day or two – where participants compete to come up with innovative new programs or applications. Sometimes … Continue Reading