Regulatory Newsletter on International Financial Services Centre Facilities (IFSC)

Introduction

The International Financial Services Centres Authority (IFSCA) has been endeavoring to further enhance the role of India’s International Financial Services Centres (IFSCs) as an international gateway of capital flows. Appreciating the growing need by investors to access world markets, motivated by portfolio diversification, maximisation of return, and hedging needs, the Authority has put in place a holistic framework to manage cross-border securities transactions on transparent and regulated lines. The circular of August 12, 2025, provides a new regulatory regime applicable to Global Access Providers (GAPs), broker-dealers, and intermediaries located in the IFSC. The aim of the circular is not merely to consolidate and revise the regulations but also to replace prior circulars of November 2021 and June 2024 so as to have uniformity and clarity in the treatment of global access operations.

The framework emerges against the backdrop of the IFSCA (Capital Market Intermediaries) Regulations, 2025 (CMI Regulations), which introduced detailed provisions for the registration, regulation, and supervision of capital market intermediaries. Furthermore, alignment with SEBI’s circular dated May 2, 2025, which permitted stock brokers registered with SEBI to operate in GIFT-IFSC through Separate Business Units (SBUs), has created the foundation for harmonising domestic and international access. The present circular, therefore, reflects an extensive consultation process with stakeholders, aiming to streamline operational responsibilities, capital requirements, client eligibility, and compliance protocols for global access activities within the IFSC.

Law

The circular defines the applicable law of the Global Access Providers, Broker Dealers, and customers accessing overseas markets via the above intermediaries. It gives a series of definitions that are vital to the operation of the circular: A Global Access Provider can be the subsidiary of a Recognised Stock Exchange that has a place of business at the IFSC or a broker dealer registered with IFSCA that comes directly into arrangements with foreign brokers. A licensed IFSC Broker Dealer remains subject to the CMI Regulations, while stock exchange subsidiaries licensed as GAPs simply become broker dealers by reason of global access alone. The Global Markets definition that comes within the scope of the U.S. equities encompasses the foreign stock markets, and an Introducing Broker is one that intermediates solely by introducing the party with no straight linkage to a foreign broker.

The rules provide that no entity can start business as a GAP unless it has prior approval of the Authority. Applications must be made on the prescribed format along with the due fee by the due date of October 31, 2025, to be complied with by the existing providers. Entities also must have prescribed minimum net worth requirements, USD 500,000 in case of full GAPs, USD 200,000 if the GAPs treat the business on a proprietary basis, and USD 100,000 if the broker dealers access the global markets on an indirect basis.

The law also stipulates requirements of being fit and proper, in aligning with the CMI Regulations’ regulation 8, which apply to the directors, key managerial persons, and dominant shareholders. Eligibility of the clients is limited to the residents of India within the ambit of FEMA, 1999, and to the non-residents as stipulated by the above act. Onboarding of the clients can be done directly as well as by virtue of the referral arrangements, subject to the strict disclosure of the fees, agreements, and obligations being mandatory.

Moreover, the structure delineates the permissible scope of financial products. GAPs can offer access to products categorized as “financial products” of the IFSC alone, by express exclusion of crypto-assets or crypto-based instruments. Access to some products like index derivatives, single-stock derivatives, bond derivatives, and USD-INR currency derivatives, already offered by IFSC exchanges, is prohibited by express provision. Notably, GAPs have to secure that resident Indian clients have access to investment permissible by the Liberalised Remittance Scheme of the Reserve Bank of India alone. The law also places requirements on GAPs on infrastructure, risk management, treatment of client monies, disclosures, and redress of grievances. All the client monies have to be channeled through IFSC bank accounts, and disclosures on risk considerations, custodial terms, structure of the account, tax implication, and charges levied have to be made during onboarding. KYC, AML, and CFT requirements laid down by the Prevention of Money Laundering Act, 2002, have to be complied with, and all user and transaction information have to be maintained within the IFSC.

Moreover, GAPs and Introducing Brokers also have the obligations of advertisement codes, Chapter III of the CMI Regulations’ general obligations, and code of conduct of Schedule II of the same. Requirements of periodic reporting also cover quarterly reporting to the Authority, yearly audit by recognised persons, and disclosure of supervisory arrangements with the stock exchanges.

Amendments

The release of the circular provides some material clarifications and adjustments to the prior regime.

• Supersession of Earlier Circulars

The circular also cancels by express words the IFSCA circular of Global Access to Broker Dealers of November 25, 2021, and the Global Access Clarifications of June 6, 2024, that have been issued thereafter. Though rights, obligations, and liabilities that have accrued theretofore remain retained, all future references of other notifications will be deemed to be to the foregoing revised circular.

• Compliance with CMI Regulations, 2025

The framework perfectly aligns with the newly notified CMI Regulations, 2025, so that the registration and regulation of GAPs reflect the overall intermediary regulator structure. Regulatory consistency has been achieved by making the subsidiaries of the Recognised Stock Exchanges the broker dealers for the sake of global access.

• Eligibility Increase of Entities

The amendments formally acknowledge the role of Introducing Brokers as a separate category, explaining their role of introducing clients with no direct foreign broker setups. It is an important clarification, providing that duties and liabilities be properly divided between GAPs and Introducing Brokers.

• Net Worth and Capital Requirements

A major amendment is the prescription of minimum net worth requirements for GAPs and broker dealers. This segregation ensures that entities maintain adequate capital buffers in addition to requirements for other activities. Existing entities have until October 31, 2025, to comply.

• Restrictions on Permitted Products

In addition, specific prohibitions also exist on access to already provided products on IFSC venues, especially on derivatives and forex markets, thus evading regulatory duplication and protecting IFSC market dominance.

• Improved Protection of Clients and Disclosures

Compared to the prior structure, the new circular has significantly tighter requirements for disclosure, including the required display of disclaimers on the login of every client by October 31, 2025. Necessarily detailed fee plans, including onboarding, exit, and account transfer fees, must be disclosed on the onset.

• Improved Risk Reporting and Risk Handling

The amendments also confirm prudent risk management regulations, data localisation in IFSC, and periodic audit requirements. Inspection powers and quarterly reporting to the Authority have been more prescriptive such that on-going supervision can be ensured.

• New Fee Structure

Annexure 1 to the circular stipulates new authorisation and periodic fee plans applicable from the quarter commencing October 1, 2025. Turnover-based fees, which have a quarterly limit of USD 10,000 per quarter on non-derivative products, also reflects a distinct departure from the past practices.

Conclusion

The updated framework is an improvement on the regulatory regime of cross-border access emanating from IFSCs. Through the consolidation of prior circulars and the institution of global access operations as a core component of the CMI Regulations, 2025, the Authority has established an integrated, transparent, and robust cross-border investment flow ecosystem. Inclusion of roles such as Introducing Brokers, as well as stringent GAPs’ obligations, allows chain-wide responsibility. Capital adequacy requirements safeguard the financial health of the intermediaries, and tough KYC, AML, and disclosure requirements safeguard investor interests. The crypto-asset prohibition and limitation on certain derivative products reflect the cautious but progressive regulatory frame of mind, where innovation has been weighed against investor protection and the soundness of the system.

In addition, the updated fee regimes and regular reporting requirements enhance supervisory regulations and revenue certainty for the Authority. Transitional timelines, with the climax on October 31, 2025, leave enough latitude for established entities to evolve while ensuring that compliant standards will be the same within some identifiable timeframe. In essence, the framework is a historic step towards making GIFT-IFSC a competitive global financial hub. Facilitating orderly and controlled access to international markets, the IFSCA has continued to advance its mission of promoting innovation with financial integrity. For market participants, the new regime demands increased preparedness on their end, but it also offers possibilities of greater access to international capital markets within a transparent and stable regime.