INSUBCONTINENT EXCLUSIVE:
Mumbai: With an aim to facilitate use of latest fintech innovations in capital markets, Sebi on Monday decided to allow live testing of new
products, services and business models by market players on select customers.
Initially, all Sebi-registered entities will be eligible to
participate in such a 'regulatory sandbox', a live testing environment where new products processes, services and business models can be
deployed on a limited set of eligible customers for a specified period of time with certain relaxations in rules and guidelines, the
regulator said.
At a meeting here, Sebi's board also decided to allow a cross domain approach for this regulatory sandbox, wherein a
regulated entity will be permitted to test solutions even for those activities for which it is not registered.
A limited registration will
be granted for such testing, Sebi said.
At a later stage, fintech startups and other entities that are not regulated by Sebi may also be
allowed, but no exemptions would be granted from the existing investor protection framework, KYC and anti-money laundering rules.
The
proposed 'regulatory sandbox' is intended to serve as a testing ground for new business models and technologies that benefit investors,
Indian markets and the economy at large.
Under this framework, the eligible entities would be granted certain facilities and flexibilities
to experiment with fintech solutions in a live environment and on real customers, while ensuring that there are necessary safeguards for
investor protection and risk mitigation.
While the Indian capital market participants have been early adopters of technology, the Securities
and Exchange Board of India (Sebi) is of the view that adoption and usage of emerging financial technology can be a key instrument to
further develop and maintain an efficient, fair and transparent ecosystem.