Sebi Mulls Approval-Free Operations for Stock Brokers in GIFT-IFSC

quick Summary:

• The Securities adn Exchange Board of India (Sebi) plans to allow stock brokers to operate in GIFT-IFSC without requiring prior approval.
• Stock brokers can establish a separate business unit (SBU) under their existing entity for securities market activities in GIFT-IFSC.
• Governance of the SBU will fall under another regulatory authority, with its own framework for policy, eligibility, risk management, grievances, enforcement, and investor claims.
• Sebi mandates segregation between SBU operations in GIFT-IFSC and Indian securities market operations.

– SBUs must have a separate account and net worth from the parent entity.
– Activities of the SBU are strictly limited to securities market services within GIFT-IFSC.

• Existing subsidiaries or joint ventures operating in GIFT-IFSC may be dismantled to switch over to this proposed model.
• Grievance redressal mechanisms like SCORES are not available for investors utilizing services of SBUs under this jurisdiction.

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Indian Opinion Analysis:

This proposal by Sebi demonstrates efforts toward streamlining financial activities within the special economic zone of GIFT City-India’s International Financial Services Center (IFSC). By allowing stock brokers easier access through direct participation via SBUs rather of subsidiary structures or joint ventures, operational versatility is enhanced. However,ring-fencing Indian securities activities ensures robust regulatory segregation between domestic markets and those at IFSC.The absence of centralized grievance mechanisms like SCORES may raise concerns about investor protection standards at IFSCs. These developments could further reinforce India’s global competitiveness in financial services but necessitate vigilance regarding regulatory alignment across jurisdictions.

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