IFSCA Authority Board approves two regulations
Date: 27 OCT 2020
A meeting of the International Financial Services Centres Authority (IFSCA) was held today.
The Board, after detailed deliberations, approved the following regulations:
International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020
The Government of India, on the recommendation of IFSCA, notified the bullion spot delivery contract and bullion depository receipt (with bullion as underlying) as Financial Products and related services as Financial Services under the IFSCA Act, 2019* on August 31, 2020.
IFSCA has been tasked with the responsibility of operationalization of this bullion Exchange. For the first time in India a single regulator will be regulating both the bullion spot and derivative contracts that would be traded on the Exchange.
The Authority approved the draft bullion regulations in its meeting today, which paves the way for setting up the entire ecosystem for bullion trading, namely, bullion exchange, depository, clearing house and vaults.
The salient aspects of the Bullion Exchange Regulations include:
- Functions and general obligations of a bullion exchange and clearing corporation
- Ownership and governance structure of a bullion exchange and clearing corporation
- Rights and Obligations of Bullion Depositories, Participants and Beneficial Owners
- The grant of registration to a vault manager by the Authority
The role of bullion depositories
- Other operational aspects of the bullion exchange
- The Bullion Exchange Regulations envisage to provide an integrated platform for all the market intermediaries including trading members/ clearing members, bullion depositories, vault managers, etc. so as to facilitate transparency and traceability in the bullion market and standardisation of bullion contracts.
International Financial Services Centres Authority (Global In-House Centres) Regulations, 2020
On October 16, 2020, Government of India, on the recommendation of IFSCA, had notified Global In-House Centres (GIC) as financial service to provide services relating to financial products and financial services.
Some of the salient features of the regulations approved by the Authority are as follows:
- A GIC may conduct its business in any mode permitted by the Authority, including branch mode
- The applicant entity shall exclusively cater to its financial services group wherein the entities served must be located in a Financial Action Task Force (FATF) compliant jurisdiction
- A financial services group is defined as any entity which is regulated by a financial services regulator or any other competent body regulating financial services activities in its home jurisdiction and include its holding, subsidiary or associate companies, branch, or subsidiary of a holding company to which it is also a subsidiary
- The support services provided by the applicant entity to its financial services group should be for the purpose of carrying out a financial service in respect of a financial product
- A GIC set up within the IFSC shall be entitled to avail itself of all concessions including tax holiday applicable to IFSC units
In recent years, GICs in India have been contributing to development of highly skilled talent pool in the country. India is emerging as world’s leading centre of digitization, with one of largest pool of digital talents. These GIC regulations issued by IFSCA has the potential to put GIFT-IFSC in the leagues of leading FinTech cities, generating significant employment opportunities.
The abovementioned regulations will be notified by the Government of India in due course.
*International Financial Services Centres Authority Act, 2019
“financial service” means—
(i) buying, selling, or subscribing to a financial product or agreeing to do so;
(ii) acceptance of deposits;
(iii) safeguarding and administering assets consisting of financial products, belonging to another person, or agreeing to do so;
(iv) effecting contracts of insurance;
(v) offering, managing or agreeing to manage assets consisting of financial products belonging to another person;
(vi) exercising any right associated with a financial product or financial service;
(vii) establishing or operating an investment scheme;
(viii) maintaining or transferring records of ownership of a financial product;
(ix) underwriting the issuance or subscription of a financial product;
(x) providing information about a person’s financial standing or creditworthiness;
(xi) selling, providing, or issuing stored value or payment instruments or providing payment services;
(xii) making arrangements for carrying on any of the services in sub-clauses (i) to (xi);
(xiii) rendering or agreeing to render advice on or soliciting for the purposes of—
(A) buying, selling, or subscribing to, a financial product; or
(B) availing any of the services in sub-clauses (i) to (xi); or (C) exercising any right associated with a financial product or any of the services in clauses (i) to (xi);
(xiv) any other service that may be notified by the Central Government from time to time;
International Financial Sevices Centres Authority (IFSCA) is a statutory unified regulatory body under the Department of Economic Affairs, Ministry of Finance, Government of India established by International Financial Services Centres Authority Act, 2019 to develop and regulate the financial products, financial services and financial institutions located / performed in the International Financial Services Centres in India.