The Securities and Exchange Commission of Pakistan (SECP) has re-issued the\u00a0SECP Regulatory Sandbox Guidelines, 2019\u00a0(Regulatory Sandbox) under the Companies Act, 2017. With\u00a0amendments to the Companies Act, 2017, in December 2021,\u00a0now incorporating\u00a0provisions on measures for greater ease of doing business\u00a0under the companies law\u00a0which includes\u00a0the facilitation of innovation and use of technology in conducting business, there is now a firm statutory basis for the Regulatory Sandbox which was lacking when the Regulatory Sandbox was\u00a0first\u00a0introduced in 2019.<\/p>\n\n\n\n
The intention behind the Regulatory Sandbox when it was\u00a0first issued in December 2019\u00a0was novel in Pakistan as a tailored regulatory environment for conducting limited scale, live tests of innovative products, services, processes, and\/ or business models in a controlled environment. This Regulatory Sandbox was available for testing of new products, business models, and services, across all sectors regulated by the SECP including insurance, capital markets,\u00a0and non-banking financial services.\u00a0<\/p>\n\n\n\n
Since its introduction, there have been two cohorts under the Regulatory Sandbox which saw various innovative products and businesses being approved for live testing: the first in the\u00a0year 2020\u00a0and the second in the\u00a0year 2021. Each cohort is a complete lifecycle of the regulatory sandbox implementation for a specified time to test the proposed products\u2019 innovation.<\/p>\n\n\n\n
In a little over two years since its inception, the Regulatory Sandbox is already promising some success. The\u00a0results of the first cohort\u00a0were released in February 2022, based on tests which focused on whether the proposed product can operate in the existing regulatory framework, requires amendments in existing framework, or otherwise requires an altogether new amended regulatory framework. This first cohort has seen\u00a0SECP grant approval\u00a0for the testing and experimentation of a Peer-to-Peer (P2P) platform, an innovative alternative digital platform to connect borrowers with individual lenders. In March 2022,\u00a0the SECP notified\u00a0draft amendments to the regulations for the non-banking financial services sector which if approved will for the first time set out the regulatory framework where NBFCs wish to provide P2P services or undertake business as a P2P service provider. It\u00a0is expected that a P2P platform will particularly increase the access of small and medium sized enterprises to lenders for their short-term borrowing requirements.<\/p>\n\n\n\n
In addition to the P2P platform,\u00a0another key take away\u00a0from testing under the Regulatory Sandbox\u00a0has been in respect of micro and digital only insurers with the SECP having issued the\u00a0position paper on registration regime for digital-only insurer\u00a0in July 2021 which is expected to amend the Insurance Rules, 2017.<\/p>\n\n\n\n
Currently, the SECP\u00a0is hoping to invite applications for the third cohort in April-May, 2022.\u00a0Under the\u00a0Regulatory Sandbox, applications can be sent by\u00a0(1)\u00a0companies registered with the SECP (whether or not licensed); (2)\u00a0unregistered start-ups intending to register if the testing is successful; (3)\u00a0internationally recognized companies; and (4)\u00a0any other persons deemed appropriate by the SECP.\u00a0Participation can be sought in areas including those relating to digital assets, alternative financial intermediation platforms, insurance policy servicing, and artificial intelligence, among others.<\/p>\n","protected":false},"excerpt":{"rendered":"
Pakistan<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","footnotes":""},"categories":[16],"tags":[18,32],"class_list":["post-4453","post","type-post","status-publish","format-standard","hentry","category-insight-article","tag-banking-and-finance","tag-corporate"],"acf":[],"yoast_head":"\n