The Securities and Exchange Board of India has made some far-reaching rule-changes in the last month. Investment advisors now have - or shortly will have - added obligations to fulfil; there are now provisions for fast-track rights issues of units by both InvITs and REITs; new rules apply to gold ETFs; and the regulator is creating a new and attenuated type of operating licence for IT start-ups.

Regulators all over the world are out of their depth when it comes to financial IT. To help themselves understand the basics, they often try to curry favour with challenger banks (relatively small retail banks that want to compete with large banks) and financial IT companies. They usually attempt to befriend these firms by offering them a farcically negligible relaxation of their rules during the initial stages of product development in return for constant meetings and updates and the right to bother IT people for tips. The mystifying name that they hang on this process is "the regulatory sandbox." As far as Compliance Matters can tell, no regulator has offered anyone an explanation of the relationship between cats in need of the toilet and financial IT.

With this in mind, SEBI has announced - in a manner that sounds rather threatening and unenticing, although it seems not to realise it - that all entities registered with it under s12 SEBI Act 1992 are "eligible for testing." It plans to insert a chapter into its rulebook to allow itself to grant limited certificates of registration to the firms that volunteer for this privilege.