The Securities and Exchange Board of India (“SEBI”) in exercise of powers conferred under Section 11(1) of Chapter IV of the Securities and Exchange Board of India Act, 1992, read with Regulation 30 of the SEBI (Stock Brokers) Regulations 1992, vide Circular No. SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/61[1] dated May 02, 2025, introduced measures to enhance ease of doing business for SEBI-registered stock brokers seeking to undertake securities market-related activities in the Gujarat International Finance Tec-City-International Financial Services Centre (“GIFT-IFSC”).
In a significant policy shift, SEBI has dispensed with the requirement of obtaining specific prior approval for stock brokers intending to operate in GIFT-IFSC. Such entities shall now be permitted to carry out such activities under a Separate Business Unit (“SBU”) of the same stock broking entity or through an existing subsidiary or joint venture, at their discretion.
Key Highlights of the Circular:
- SBU Framework Permitted: Stock brokers may establish an SBU within GIFT-IFSC to undertake securities market activities without prior SEBI approval.
- Ring-Fencing and Segregation: SBU operations must be ring-fenced and segregated from domestic Indian securities market operations. Additionally, an arm’s-length relationship must be maintained between the parent entity and the SBU.
- Separate Accounts and Net Worth: SBUs shall maintain separate financial accounts and the net worth of the SBU must be independent of the domestic entity and adhere to IFSCA’s regulatory requirements.
- Regulatory Jurisdiction: All SBU activities in GIFT-IFSC shall fall under the jurisdiction of the International Financial Services Centres Authority (IFSCA), including aspects like eligibility, risk management, grievance redressal, and enforcement.
- Investor Protection Mechanism: Investors engaging with the SBU shall not be covered by SEBI’s SCORES platform, the Investor Protection Fund (IPF), or stock exchange grievance mechanisms applicable in the domestic market.
- Transition Option: Stock brokers that have already established subsidiaries or joint ventures for GIFT-IFSC operations may opt to dissolve those structures and continue such services through an SBU.
[1]https://www.sebi.gov.in/legal/circulars/may-2025/measure-for-ease-of-doing-business-facilitation-to-sebi-registered-stock-brokers-to-undertake-securities-market-related-activities-in-gujarat-international-finance-tech-city-international-financia-_93775.html