SEBI eases norms for stock brokers to operate from GIFT city, abolishes separate NOC requirement

Markets regulator SEBI on Friday allowed stock brokers to operate in the International Financial Services Centre (IFSC) at GIFT City, without taking its prior approval.

Stock brokers proposing to undertake securities market-related activities in GIFT-IFSC are permitted to do so under a separate business unit (SBU) of the stock broking entity itself. These activities can also be carried out if the branch qualifies as an SBU, SEBI said in its circular.

Moreover, the existing practice of carrying out securities market-related activities in GIFT-IFSC through a subsidiary is also allowed. Thus, the form in which these activities are to be carried out is at the discretion of the entity.

The matters related to policy, eligibility criteria, risk management, investor grievances, inspection, enforcement, and claims for SBU in GIFT-IFSC would be specified under the regulatory framework issued by the regulatory authority concerned and all activities of the SBU in GIFT-IFSC would be under the jurisdiction of that regulatory authority.

Further, SEBI asked brokers to ensure that the securities market-related activities of the SBU in GIFT-IFSC are segregated from the Indian securities market-related activities of the stock broker.

Such SBU in GIFT-IFSC will be exclusively engaged in providing securities market-related activities as permitted by the IFSCA. Further, the activities to be carried out by the SBU will be as permitted by the IFSCA.

Stock brokers are required to prepare and maintain a separate account for the SBU on an arms-length basis.

SEBI said the net worth of the SBU will be kept segregated from the net worth of the stock broker in the Indian securities market. The net worth for the purpose of the SBU will be as per the regulatory framework issued by the regulatory authority concerned.

Stock brokers who have already floated a subsidiary or entered into a joint venture to undertake securities market-related activities in GIFT-IFSC after obtaining approval from SEBI will have the option to dismantle at its discretion, such subsidiary or joint venture and carry out such services under an SBU of the stock broking entity itself.