Sebi approves regulatory sandbox for live testing innovative products and services

Markets regulator Securities and Exchange Board of India (Sebi) will allow live testing of new products, processes, services and business models as part of the regulatory sandbox model. The decision was announced by the regulator on Monday following a meeting of its board.

To begin with, entities registered with the regulator under Section 12 of the Sebi Act 1992 are eligible to test out new products developed by it or by using the services of a fintech firm. The registered entity will be solely responsible for testing the solution in the sandbox. 

During the meeting the regulator said that it will allow cross-domain approach for the sandbox where the registered entities can test solutions for which they might not be registered. Sebi will grant a limited certificate of registration to such entities.

The regulator had first said that it would be working on guidelines around a regulatory sandbox model on May 2019 allowing companies to test their innovation or models for a period of nine months with an extension of three months at the maximum. The sandbox was designed to give access on depositories, stock exchange, mutual funds and others controlled by the regulator to the participants for a controlled testing of new business models and services. 

In a discussion paper published on 28 May, 2019, the regulator said that applicants to the sandbox would be evaluated by the Market Regulation Department of the regulator which will be the secretariat for the complete duration of the trial. Sebi had also said that it would assign an officer from the organisation to supervise each applicant during the course of deployment and testing.