Hong Kong is the latest in a string of regulators to set up such a service.

Hong Kong's securities watchdog is launching a so-called “sandbox” to allow firms to test innovative technologies in a confined regulatory environment. 

The service aims to enable qualified firms, through “close dialogue” and supervision, to identify and address any risks or concerns with their offerings before they are extended to Hong Kong's public, the city-state's Securities and Futures Commission said in an online statement. 

“The SFC recognises that firms utilising innovative technologies may broaden investor choice and benefit the Hong Kong financial services industry,” said Ashley Alder, the SFC’s chief executive. “For the sake of market integrity and better investor protection, the sandbox provides a confined regulatory environment for qualified firms to demonstrate the reliability of their fintech solutions, as well as their internal control systems at the initial stage.”

Once services have been tested in the sandbox, the SFC may impose licensing conditions to minimise risk exposure to investors and clients, it said. 

The regulator warned that the “sandbox should not be viewed as a means to circumvent legal and regulatory requirements” and said it may revoke licences if a firm's operations are deemed “not fit and proper”.