SEBI introduces framework for Regulatory Sandbox. Eligibility, application & approval process

SEBI introduces framework for Regulatory Sandbox. Eligibility, application & approval process



June 05, 2020

All Stock Exchanges, Clearing Corporations and Depositories
All Intermediaries

Dear Sir/Madam,

Subject: Framework for Regulatory Sandbox

1.Participants in the capital market in India have been early adopters of technology. SEBI believes that encouraging adoption and usage of financial technologies (‘FinTech’) can act as an instrument to further develop and maintain an efficient, fair and transparent securities market ecosystem.

2. Towards this end, SEBI vide circular SEBI/HO/MRD/2019/P/64 dated May 20, 2019, stipulated a framework for an industry-wide Innovation Sandbox, whereby FinTechstartups and entities not regulated by SEBI were permitted to use the Innovation Sandbox for offline testing of their proposed solution.

3. Further, SEBI now has decided to introduce a framework for “Regulatory Sandbox”. Under this sandbox framework, entities regulated by SEBI shall be granted certain facilities and flexibilities to experiment with FinTech solutions in a live environment and on limited set of real customers for a limited time frame. These features shall be fortified with necessary safeguards for investor protection and risk mitigation.

4. The guidelines pertaining to the functioning of the Regulatory Sandbox are provided at Annexure A.

This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 and Section 19 of the Depositories Act, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Yours faithfully,

Bithin Mahanta
Deputy General Manager
Division of Technology & Cyber Security
Market Regulation Department-1
Phone: +91-022-26449634

Annexure A


Eligibility criteria for the project

Application and approval process

Evaluation criteria

Regulatory exemptions

Submission of test related information and reports

Obligations of the applicant towards the user

Extending or exiting the sandbox

Revocation of the approval

Regulatory Sandbox Application Form
Flowchart: Application and Approval Process

Download Circular Click Here >>

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