International Financial Services Centres Authority (“IFSCA”), in exercise of powers conferred under Section 12 and Section 13 of the International Financial Services Centres Authority Act, 2019, vide Circular No. IFSCA/CMD-MIIT/RTP/2024-25/001[1] dated February 11, 2025, issued the modifications regarding eligibility criteria of foreign entities as the Remote Trading Participants (“RTPs”) on the stock exchanges (“Circular”). This Circular supersedes the previous IFSCA circular dated April 03, 2024, on RTPs.
IFSCA, through its circular dated April 03, 2024, on RTPs, permitted foreign entities, without a physical presence in the International Financial Services Centre (“IFSC”) to trade directly on Stock Exchanges as RTPs in the IFSC. The key features of the Circular include:
I. Conditions of Onboarding Regulated Foreign Entities:
- The entity must be a resident of a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding (IOSCO-MMoU) or has a bilateral Memorandum of Understanding (MoU) with IFSCA.
- The entity must be a body corporate and shall not be a resident of a country that is listed as having strategic deficiencies in Anti-Money Laundering (AML) or Combating the Financing of Terrorism (CFT) by the Financial Action Task Force (“FATF”). The entity must also not be from a country that is subject to FATF countermeasures or has not made progress in addressing such deficiencies.
- The entity shall only be permitted to trade on a proprietary basis and shall not be permitted to onboard clients for trading.
- The entity shall be permitted to transact exclusively in cash-settled derivative products on Stock Exchanges in the IFSC
- The entity must enter into an agreement with an IFSCA-registered Clearing Member for the clearing and settlement of its transactions executed on the Stock Exchanges.
II. Conditions of Onboarding Non-Regulated Foreign Entities:
- All RTPs must adhere to IFSCA (Anti-Money Laundering, Counter Terrorist Financing, and Know Your Customer) Guidelines, 2022.
- Foreign entities not regulated by their home jurisdiction’s securities market regulator may also be eligible to onboard as RTPs, if they are members of specified prominent Stock Exchanges, inter-alia, including the New York Stock Exchange (NYSE), London Stock Exchange (LSE), Singapore Exchange (SGX), as detailed in the Circular. These entities must also comply with the conditions applicable to regulated entities, including the restriction to proprietary trading only and the requirement to enter into an agreement with a registered Clearing Member.
- It is pertinent to be noted that Indian entities are explicitly excluded from being onboarded as RTPs by the Stock Exchanges in IFSC.
III. Responsibility of Stock Exchanges:
- Stock Exchanges are responsible for specifying the terms and conditions for onboarding RTPs, which include establishing:
- Risk management measures;
- code of conduct for RTPs; and
- any additional criteria like net-worth requirements, security deposits, application fees, and annual fees.
- Stock Exchanges shall also have the flexibility to define further conditions to ensure compliance with the requirements set by IFSCA.
- The Stock Exchanges shall have operational discretion to determine specific onboarding conditions. These measures are meant to ensure that the RTPs comply with the eligibility conditions stipulated by IFSCA.
- The recognized Stock Exchanges must amend their byelaws, rules, and regulations to implement the revisions of this Circular.
- The Stock Exchanges are required to report the status of implementation of this Circular in their Monthly Development Report (MDR) to IFSCA.
[1]https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2Fremote-trading-participants-on-the-stock-exchanges11022025094726.pdf&Title=Remote%20Trading%20Participants%20on%20the%20Stock%20Exchanges&Date=11%2F02%2F2025