Sebi comes out with Innovation Sandbox framework for fintech solutions

The Securities and Exchange Board of India (Sebi) on Monday came out with a framework for Innovation Sandbox that will help provide financial technology firms and unregulated market participants an environment to test their new solutions with markets data.

The framework can be utilised by any entity that intends to innovate on the products, services, and solutions for the securities and commodities market in India. The entities will have access to markets data but not live data to test their solutions.

"Sebi feels that fintech firms should have access to market related data, particularly, trading and holding data, which is otherwise not readily available to them," the regulator said in a circular.

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The data that would be made available to the participants to test and improve their Fintech solutions include depositories data (holding data, KYC data), stock exchange data (transactions data like order log, trade log), and mutual funds transactions data.

The use of datasets would be governed by comprehensive confidentiality agreement clearly specifying that the datasets should not be sold or shared in any manner with any other entity.

"The Innovation Sandbox can be set up as a separate not-for-profit entity, which enhances the impartiality of the Innovation Sandbox," the circular said.

Regarding administrative set up, Sebi said a governance body comprising of representatives from stock exchanges, depositories and qualified registrar and share transfer agents (QRTA) should be formed to supervise the operations of Innovation Sandbox.

Besides, an operational team needs to be constituted to carry out the day-to-day activities, including applications processing, assisting the governance body and maintaining the infrastructure of the Innovation Sandbox.

For the implementation of operating guidelines, Sebi has asked entities to constitute a steering committee that would have representatives from the Market Infrastructure Institutions and QRTAs, the circular said.

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