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