SEBI urges 'arms-length relationship' between GIFT-IFSC and securities market activities
Published on 02/05/2025 07:38 PM
SEBI urges 'arms-length relationship' between GIFT-IFSC and securities market activitiesSEBI has allowed brokers to operate in GIFT-IFSC without prior approval but stressed that these units must be ring-fenced from domestic market activities and operate on an arms-length basis.By Sheersh Kapoor May 2, 2025, 7:38:19 PM IST (Published)2 Min ReadThe Securities and Exchange Board of India (SEBI) has permitted registered stock brokers to undertake securities market activities in the Gujarat International Finance Tec-City International Financial Services Centre (GIFT-IFSC) without requiring prior SEBI approval, provided these are carried out through a separate business unit (SBU).
In a circular dated May 2, SEBI emphasised that while this measure is aimed at easing business operations, a strict arms-length relationship must be maintained between GIFT-IFSC units and Indian market operations.
Stock brokers may operate through either an SBU or a subsidiary, but the choice of structure is left to the entities. However, SEBI has introduced a series of safeguards to ensure regulatory clarity and investor protection.
“Stock brokers shall ensure that securities market related activities of the SBU in GIFT-IFSC are segregated and ring-fenced from the Indian securities market related activities of the stock broker and arms-length relationship between these activities is maintained,” SEBI stated.
Also Read: SEBI over-regulating in parts, admits Chairman Tuhin Kanta Pandey; bats for smarter oversight
Key financial separations have also been mandated. “The net worth of the SBU shall be kept segregated from the net worth of the stock broker in the Indian securities market,” SEBI said, adding that the SBU’s net worth shall be determined under the regulatory framework of the International Financial Services Centres Authority (IFSCA).
Further, investor grievance redressal mechanisms available in India — such as SCORES and stock exchange IPFs — will not be applicable to GIFT-IFSC operations. Brokers currently operating in the IFSC via subsidiaries or JVs can shift to the SBU structure at their discretion.
This circular was issued under SEBI’s powers to regulate securities markets and protect investors, as outlined in the SEBI Act of 1992.Continue Reading(Edited by : Shoma Bhattacharjee)Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsGIFT CityIFSCSEBIsecurities market
In a circular dated May 2, SEBI emphasised that while this measure is aimed at easing business operations, a strict arms-length relationship must be maintained between GIFT-IFSC units and Indian market operations.
Stock brokers may operate through either an SBU or a subsidiary, but the choice of structure is left to the entities. However, SEBI has introduced a series of safeguards to ensure regulatory clarity and investor protection.
“Stock brokers shall ensure that securities market related activities of the SBU in GIFT-IFSC are segregated and ring-fenced from the Indian securities market related activities of the stock broker and arms-length relationship between these activities is maintained,” SEBI stated.
Also Read: SEBI over-regulating in parts, admits Chairman Tuhin Kanta Pandey; bats for smarter oversight
Key financial separations have also been mandated. “The net worth of the SBU shall be kept segregated from the net worth of the stock broker in the Indian securities market,” SEBI said, adding that the SBU’s net worth shall be determined under the regulatory framework of the International Financial Services Centres Authority (IFSCA).
Further, investor grievance redressal mechanisms available in India — such as SCORES and stock exchange IPFs — will not be applicable to GIFT-IFSC operations. Brokers currently operating in the IFSC via subsidiaries or JVs can shift to the SBU structure at their discretion.
This circular was issued under SEBI’s powers to regulate securities markets and protect investors, as outlined in the SEBI Act of 1992.Continue Reading(Edited by : Shoma Bhattacharjee)Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsGIFT CityIFSCSEBIsecurities market