SEBI approves 'regulatory sandbox'

(Commerce Rep) Mumbai, Ta. 17 February 2020, Monday

The Securities and Exchange Board of India (SEBI) has decided to allow live testing on selected products of new products, services and business models by Market Participants.

By giving some concessions to the SEBI rules and guidelines in the beginning, all SEBI registered units-entities will be allowed to participate in such regulatory sandboxes by testing live, placing a limited number of valid customers there for a fixed period of new products' processes, services and business models.

At a board meeting held at SEBI today, SEBI decided to allow the entity under test solutions to regulate this regulatory sandbox, even for activities that are not registered.

SEBI will provide limited registration for this type of testing. While fintech startups and other entities not already regulated by SEBI may be allowed at a later stage, there will be no exemptions or relaxations in the current investor protection framework, KYC and anti-money laundering rules.

The proposed regulatory sandbox has been launched with the purpose of expanding benefits to investors, Indian markets and the economy by providing a testing ground for new business models and technologies.

Entities recognized under this framework will be provided with live security and fintech solutions to real customers, with certain facilities and guaranteed security necessary for investor protection and risk mitigation.