SEBI Revises Objective, Eligibility Criteria of Innovation Sandbox

On February 3,  2021 The Securities and Exchange Board of India (SEBI) revised the objective and eligibility criteria of innovation sandbox.

Aim: To encourage innovation and boost participation in the securities market

What is an Innovation Sandbox?

It eases access to an environment (testing facilities  and  test  data) that is provided by  Enabling  Organizations like StockExchanges,Depositories andQualified Registrar and ShareTransferAgents(QRTAs). The testing environment enables the applicants to do offline testing of their applications.

Revisions of Innovation Sandbox:

Objective:

i.To promote innovation in terms of new products and  services, besides as a new way to deliver existing products and services for the following purpose:

• Create new opportunities in the securities market
• Make existing services more efficient,  investor friendly and inclusive

ii.This can be achieved when access is given to  Financial Institutions,  FinTech  firms,  startups  including entities  not  regulated  by  SEBI  including individuals

to test data and test environment

Stages & Eligibility Criteria:

Stage –I:

During this stage, limited  access  to  the  test  environment will be given. Apart from this, there will be cap on  the  utilization  of  resources  in  terms  of processing power, memory, storage etc

Eligibility Criteria

i.The applicant must be an Indian Citizen or entities registered in India.

ii.The Know Your Customers (KYC)norms must be in accordance with the Central Know   Your   Customers   Registry (CKYCR)and KYC   Registration Agency (KRA)KYC requirements.

• It is to be noted that the applicant must have a genuine need to test the solution using resources available in the Innovation  Sandbox.

Stage –II:

The cap on the utilization  of  resources  shall  be removed during this phase.

The removal is bound to the availability of resources at that point of time

Eligibility Criteria

An applicant if completed a minimum 60 days in the Stage-I  of  Innovation  Sandbox  testing will be eligible to enter into stage 2 of the testing.The following are the eligibility criteria for Stage-II:

1.Purpose must Align with Objective 

The purpose of the project must align with the objective of the innovation sandbox.

2.Demonstration

The applicant needs to demonstrate that they made adequate progress and are on track with their testing plan.

3.Post-testing plan

The applicant must present  their  post-testing plan.

4.Benefits to investors

The solution of the applicant must offer direct or indirect benefit to investors and the capital market and financial sector as a whole.

Steering Committee:

Purpose– To drive the innovation sandbox  and also to  supervise its operations.

Members– It comprises representatives from the enabling organisations. In addition to them, SEBI representative will also be a member.

Role– Process the  applications submitted by applicants and approve or reject applications and assign lead enabling organisations.

Note– This has been issued by SEBI in exercise of its powers conferred under Section11(1)of the Securities and Exchange Board of India Act,1992 and Section 19 of the Depositories Act,1996 to protect interest  of  investors  in  securities  and  to  promote  the  development  of,  and  to regulate the securities market.

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Recent Related News:

On August 7, 2020, the Securities and Exchange Board of India (SEBI) amended the clause 4 (2) of SEBI international financial services centre (IFSC) guidelines, 2015 pertaining to eligibility criteria and shareholding limit for clearing corporations that wish to operate in such centres.

About Securities and Exchange Board of India (SEBI):

Establishment– April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
Chairman– Ajay Tyagi
Headquarters– Mumbai, Maharashtra