New Zealand’s Financial Markets Authority (FMA) is launching a pilot “regulatory sandbox” and is asking for applications from interested parties.

A regulatory sandbox is a concept which allows firms to test innovative products, services or business models. An initial pilot phase will run from January to July 2025, with a decision on the need for a permanent FMA regulatory sandbox to be made later in the year.

This pilot will be open to all parts of the financial sector that come under the FMA remit and can include both new entrants and those firms already with a market presence.

The pilot is also open to more than just regulated financial services, and can include products or services that, for example, simplify compliance solutions, or use blockchain or regulatory technologies.

Sandboxes can help spur innovation by allowing both startups and established licensed financial institutions to test new products and services in a controlled environment.

Firms can test their systems in a monitored space, allowing them to obtain a deeper understanding of supervisory expectations. The opportunity to adjust a product or service before full commercial launch may help reduce costs for firms.

FMA is also welcoming applications from those firms bringing new products to market outside of this six-month window, which will help the regulator build a forward-looking perspective on potential demand.

For this initial phase FMA is looking for firms that:

• Have a product ready to be tested in the New Zealand market with customers.
• Understand what aspects of existing financial regulation apply to their product or service.
• Have considered where they need guidance from the FMA and why participation in the sandbox will help to their ‘go to market’ plans.

To participate in the regulatory sandbox, firms will have to apply to the FMA. The regulator will examine whether the application meets the criteria for participation, such as what barriers the firm is facing in bringing their product to market, whether these are areas that the FMA can influence and the need and readiness of the firm. This information will be used to help decide whether to accept the firm for testing in the 2025 pilot.