CMF publishes SFA regulations under Fintec Act

The Financial Market Commission announced the publication of a regulation aimed at regulating the open financial system under the Fintec Act.

Following this announcement, the regulation represents a milestone for the Chilean financial market, as well as a central step in the implementation procedure of the Fintec Law (No. 21,521), which was approved in early 2023. Its main objective is to promote competition, optimization and integration in the financial system.

The Act, which is set to enter into force 24 months from today, regulates the general functioning of the Open Finance System. It will enable individuals, individuals and companies to share their information in the financial system, as well as access improved conditions or new products and solutions that meet the needs, preferences and requirements of customers and partners.

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The SFA is a system defined by law that is intended to enable financial system customers to share their data securely in order to obtain better benefits and optimized conditions in the conclusion of financial solutions contracts. The Commission also hopes that with the issuance of this regulation, the benefits expected by the Fintech law, including better competition and financial inclusion, will be realized.

Title III of the Fintech Act will also regulate institutions that voluntarily choose to register with the SFA to offer financial solutions to customers, primarily of two types. This includes solutions that leverage the information of financial institution customers, which are called information service providers (ISPs), and payment initiation tools that enable direct transfers from user accounts to third parties, which are called payment initiation service providers (PSIPs).

The regulation applies to entities currently supervised by the CMF, as well as others that will be included in the regulatory circuit as participants in the SFA. It should also be noted that the preparation of the standard included several instances of participation and discussion of proposals, as well as a public consultation held from 15 April to 15 May 2024.

In addition, Title III of the Fintech Act governs the SFA and establishes the matters to be regulated by the CMF. The decision of this Commission was to issue a single standard that would compile all these matters, while being structured in the following sections. Section I would include the Perimeter of the Open Finance System, Section II Operation of the System, Section III System Security and Safeguards, Section IV System Information and Section V Other Provisions.

The period of inclusion of the Open Finance System is to be gradual, depending on the role played by each participant within this system. The first stage specified in this regulation has a period of 24 months to enter into force. This period will be used for the adjustments required for implementation by each of the SFA participants, and will also include the CMF and provide Directory solutions for the operation of the System.

After this period, the regulation will include an implementation timetable that will begin with the gradual provision of information to be shared by financial institutions and payment card issuers over the next 18 months.

The SFA regulation has been defined in three levels, the first two establishing general guidelines and safeguards required from participants, as well as technical definitions regarding the standards to be used to operate the system. In addition, these will be supplemented by technical specifications or Level 3 regulations, which will be issued by the CMF within the first 24 months. This will allow for the proper implementation of Level 1 and Level 2 regulations, which will support the interoperability of the SFA.