Financial products: SECP approves various 'innovative' solutions under SCRS

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) under the Second Cohort of Regulatory Sandbox has granted approval to various innovative solutions including parametric insurance, real estate asset tokenization, unified digital distribution of mutual fund application, digital identity/AML/KYC (AI-based) and centralized KYC.

The SECP, in pursuance of its reforms agenda to support and encourage fintech revolution in the country had launched the Second Cohort of Regulatory Sandbox (SCRS) in April 2021.

The 2nd cohort received immense response from a wide range of innovators including well-established entities, foreign companies and start-ups. Dozens of applications proposing modern solutions and business models were received, however, preference was given to innovation in the areas of security token offerings (STOs), blockchain/ distributed ledger, machine learning and robotic processes automation-based solutions. A good number of female entrepreneurs also submitted applications.

The approved applicants will be allowed live testing and experimentation of business models in a controlled environment for a period of up to six months. At the end of the testing period, applicants shall submit a comprehensive report to the SECP for sharing overall results and statistics, which will then determine the future course of action for these innovations. This process will assist in bringing new and beneficial technology products for the end users to the market.

The SECP believes that testing of technology driven solutions through Regulatory Sandbox can stimulate financial and technological innovation and broaden the range of financial products. Such initiative also supplements the SECP's vision of enhancing financial inclusion and promotion of FinTech and InsurTech sectors in its regulated domain.

Copyright Business Recorder, 2021