SECP Launches a Regulatory Sandbox Guide for Startups

The Securities and Exchange Commission of Pakistan (SECP) has taken another major step to facilitate the corporate sector in the country by issuing guidelines to promote innovation in financial services in insurance, non-banking finance, and the capital markets.


SECP has introduced the ‘Regulatory Sandbox Environment’ for companies to conduct limited scale live tests of new products, services or business models in a controlled environment.

The guidelines have been issued in the wake of growing digital businesses where the operator works as an intermediary or sells knowledge-based solutions to other businesses.

The Regulatory Sandbox Guidelines 2019 is primarily applicable for new products, services or business models which have not been addressed under existing laws and regulations. Under the guidelines, the applicants can apply for inclusion in regulatory sandbox implementation where they can test their innovative solutions at a specified time.

An SECP official explained,

The world is moving towards new modes of entrepreneurship, and it has been proven that many innovators do not have the resources or capacity to establish large businesses, so now the SECP will facilitate them. Besides the growth of technology is opening new avenues in all sectors.

The applicants can apply for inclusion in a cohort which is a complete lifecycle of the regulatory sandbox implementation where a set of applicants enter in order to test their innovation in a specified time.

The applications for experimentation through the regulatory sandbox can be sent in three ways:

  • All companies registered with the commission including but not limited to: licensed entities (entities that have obtained registration or license from the SECP), financial technology (FinTech) companies, technology providers, and any other companies.
  • Presently unregistered startups with the intent to get registered in case of successful testing in order to scale out to a larger market.
  • Internationally recognized/well-known companies or any other persons as deemed appropriate by the commission.

The apex regulator maintains that the Regulatory Sandbox shall be operated in accordance with the cohort approach i.e. an experimentation cycle will be evaluated and finalized before the commencement of the next experimentation cycle.

The proposed innovation should either introduce a new idea to the local market or introduce a new use case for an existing idea. It should promote equal opportunity to access financial services in Pakistan and should increase financial literacy.

The categories in which the applicant may apply for implementing innovation for the aforementioned objectives are:

  1. Innovative product development and/ or distribution
  2. Alternate financial intermediation platform (For example, person to person lending, etc.)
  3. Crowdfunding, (equity, debt, donation, rewards)
  4. Digital Assets
  5. Innovative insurance underwriting
  6. Insurance policy servicing
  7. Alternate risk transfer mechanisms
  8. Financial/ robotic advisory
  9. Claims adjudication and payments
  10. Artificial Intelligence
  11. Any other category as the SECP may deem fit.

The applicant can also request for testing into a new category other than the ones mentioned above.

SECP will communicate the results of the preliminary screening to the applicant within 30 working days. Incomplete applications and those lacking clarity and vision shall not proceed to the next step.

After the above stage, the regulator shall carefully review and evaluate the applications within 45 working days and may ask for additional information from the applicant. The SECP shall issue a letter of approval (LoA) to the successful applicants to participate in the Regulatory Sandbox.


Once the application is approved, the approved applicant will be allowed to operate in the sandbox environment for a period of six months under SECP’s watchful eye.

You can further read the guidelines below.

SEC Regulatory Sandbox Guidelines 2019



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