Sebi readies norms for innovation sandbox entry

New Delhi: Markets regulator Sebi on Wednesday said it has put in place the revised graded entry norms for innovation sandbox, to promote innovation in new products and services. The new framework is also aimed at increasing participation in the innovation sandbox. This would be achieved by giving access to both test data and test environment to financial institutions, financial technology (fintech) firms, startups and entities not regulated by Sebi including individuals, the regulator said in a statement.

Innovation sandbox facilitates access to an environment (testing facilities and test data) provided by enabling organisations like stock exchanges, depositories and qualified registrar and share transfer agents (QRTAs), wherein innovators (sandbox applicants) would test their innovations in isolation from the live market. According to Sebi, capital market participants in India have been early adopters of technology. It believes that encouraging adoption and usage of fintech would have a profound impact on the development of the securities market. Fintech can act as a catalyst to further develop and maintain an efficient, fair and transparent securities market ecosystem.

To create an ecosystem that promotes innovation in the securities market, Sebi is of the opinion that fintech firms should have access to market-related data which is otherwise not readily available to them. They should also have a test environment to enable them to test their innovations effectively before the introduction of such innovations in a live environment, it said.