SEBI approves live testing of new fintech products

Stock market regulator Securities and Exchange Board of India (SEBI) on Monday decided to allow live testing of new fintech products, services and business models by market players on select customers to facilitate the use of latest innovations in capital markets.

All SEBI-registered entities will be eligible to participate in such a 'regulatory sandbox,' a live testing environment where new products processes, services and business models can be deployed on a limited set of eligible customers for a specified period of time with certain relaxations in rules and guidelines, it said in a statement.

The SEBI board also decided to allow a cross-domain approach for this regulatory sandbox under which a regulated entity will be permitted to test solutions even for those activities for which it is not registered.

"This concept of limited registration will facilitate entities to operate in a regulatory sandbox without being subjected to the entire set of regulatory requirements to carry out that activity," SEBI said.

In another move, the regulator said that an individual investment advisor cannot provide distribution services to clients as it has segregated advisory and distributing activities.

SEBI will introduce an upper limit on the fees charged to clients by investment advisers. There will be enhanced eligibility criteria for registration as an investment advisor, including net worth, qualification and experience requirements.

However, the existing individual investment advisers will be grandfathered from complying with the enhanced qualification and experience norms.

SEBI also approved provisions for fast-tracking rights issue of units by real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).