The India International Financial Services Centres Authority (IFSCA) published an update on supervisory measures to assess whether Capital Market Intermediaries (CMIs) in the GIFT International Financial Services Centre (IFSC) maintain adequate on-the-ground “substance” at their registered offices. Following multiple rounds of market intelligence visits, IFSCA identified instances of non-compliance and initiated regulatory action against the concerned CMIs under the applicable framework. Key observations included offices being closed or unattended during business hours, absence of the Principal Officer and/or Compliance Officer with no authorised personnel available to respond to supervisory queries, and cases where the same individual was appointed as both Principal Officer and Compliance Officer, including repeat instances despite prior warnings or advisories. IFSCA also found cases where designated officers lacked adequate awareness of the CMI regulatory framework, inspections where only back-office staff were present, deficiencies in operational infrastructure, and practices inconsistent with jurisdictional requirements, including trading conducted via remote access software such as Anydesk or Ultraviewer and instances where the Compliance Officer also handled the trading desk, creating a conflict of interest. These findings were linked to requirements under the IFSCA Capital Market Intermediaries Regulations, 2025, including Regulations 9(1), 9(6), 11(b) and clause 16 of Part A of Schedule II on the presence of designated key managerial personnel in the IFSC and maintenance of adequate operational infrastructure. IFSCA advised all CMIs to ensure substance and strict adherence to the IFSCA Capital Market Intermediaries Regulations, 2025 and related circulars and guidelines.
India International Financial Services Centres Authority 2026-03-19
India International Financial Services Centres Authority initiates regulatory action after substance checks on GIFT IFSC capital market intermediaries
The India International Financial Services Centres Authority published findings from supervisory visits assessing whether Capital Market Intermediaries in the GIFT IFSC maintain adequate on-the-ground substance, identifying multiple non-compliance instances and initiating regulatory action. Issues included closed or unattended offices during business hours, absence or dual-hatting of Principal and Compliance Officers, poor awareness of the regulatory framework, deficient operational infrastructure, remote trading inconsistent with jurisdictional requirements, and conflicts of interest where Compliance Officers also handled trading. The authority reminded intermediaries to ensure substance and strict adherence to the IFSCA Capital Market Intermediaries Regulations, 2025 and related guidance.