TaxTMI 
TaxTMI 
International Financial Services Centres Authority (Capital Market Intermediaries) Regulations, 2025
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....f their publication in the Official Gazette. 2. Objective These regulations provide the regulatory framework for registration, regulation and supervision of capital market intermediaries operating in international financial services centres in India with the objectives of protecting the interests of investors and maintaining the integrity of the securities market. 3. Definitions (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings as assigned to them below, and their cognate expressions shall be construed accordingly, - (a) "Act" means the International Financial Services Centres Authority Act, 2019 (50 of 2019); (b) "associate" in relation to a person shall include another person: (i) who, directly or indirectly, by himself, or in combination with other persons, exercises control over the first person; (ii) who holds control of at least twenty percent of the total voting power of the first person; (iii) who is a holding company or a subsidiary company of the first person; (iv) who is a relative of the first person; (v) who is a member of a Hindu Undi....
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....r shareholding or management rights or shareholders agreements or voting agreements or in any other manner, including by holding interest, whether direct or indirect, to the extent of more than fifty per cent. (50%) of voting rights or interest: Provided that a director or officer of an entity shall not be considered to be in control over such entity, merely by virtue of holding such position; (l) "credit rating agency" means a person which is primarily engaged in rating of securities, financial products, issuers or sovereigns; (m) "custodial services", in relation to financial products, means safekeeping of such financial products and providing services incidental thereto, and includes: (i) maintaining accounts of such financial products; (ii) collecting the benefits or rights accruing to the client in respect of such financial products; (iii) keeping the client informed of the actions taken or to be taken by the issuer, having a bearing on the benefits or rights accruing to the client; (iv) maintaining and reconciling records of the services; and (v) undertaking activities relating to issuance of depository receipts i....
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....e group, together with branches and/or subsidiaries; (w) "inspecting authority" means one or more persons appointed by the Authority to undertake inspection of the books, accounts, records and documents of a capital market intermediary under these regulations; (x) "International Financial Services Centre (IFSC)" shall have the same meaning as assigned to it under clause (g) of sub-section (1) of section 3 of the Act; (y) "investment advice" means advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products, whether written, oral or through any other means of communication for the benefit of the client and shall include financial planning: Provided that investment advice given through newspaper, magazines, any electronic or broadcasting or telecommunications medium, which is widely available to the public shall not be considered as investment advice for the purpose of these regulations; (z) "investment adviser" means a person, who for consideration, is engaged in the business of providing investment advice to ....
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...." means a depository recognised by the Authority; (gg) "recognised stock exchange" means a stock exchange recognised by the Authority; (hh) "registered distributor" means a distributor registered with the Authority under these regulations; (ii) "registered credit rating agency" means a credit rating agency registered with the Authority under these regulations; (jj) "registered debenture trustee" means a debenture trustee registered with the Authority under these regulations; (kk) "research entity" means a person registered as a research entity with the Authority under these regulations and who is responsible for publishing or providing research report with respect to securities and includes: (i) preparation or publication of the content of the research report; (ii) providing research report; (iii) making 'buy/sell/hold' recommendation; (iv) giving price target; or (v) offering an opinion concerning public offer; (ll) "research report" means any written or electronic communication that includes research analysis or research recommendation, or an opinion concerning securities or....
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....ticipant; (g) Distributor; (h) ESG Ratings and Data Products Provider; (i) Investment adviser; (j) Investment banker; and (k) Research Entity. (2) A Banking Unit may act as a banker to an issue in an IFSC subject to compliance with the regulatory provisions specified by the Authority under these regulations. (3) A Banking Unit may act as an investment banker subject to authorisation in accordance with the requirements specified by the Authority under these regulations. (4) Notwithstanding anything contrary contained in these regulations, the following is exempted from seeking separate registration under these regulations as a - (a) 'Research Entity', if an investment adviser or credit rating agency or Fund Management Entity registered with the Authority which issues, circulates or distributes a research report to public. (5) The following persons are exempted from the requirement of seeking registration under these regulations - (a) as an 'investment adviser', if- (i) a person who gives general comments in good faith in regard to trends in the financial or securities market or the economic situation....
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....ment of obtaining registration under these regulations shall be applicable, in case an entity located outside IFSC sets up a unit in an IFSC for providing aforementioned services. (6) In addition to sub-regulations (1) to (3), the Authority may specify norms for obtaining authorisation or registration as CMI. 5. Application for registration (1) An entity desirous of obtaining a certificate of registration as a CMI in IFSC shall submit an application form through SWIT along with documents and application fees, in the manner as specified by the Authority: Provided that the applicant seeking registration to act as a broker dealer, clearing member, depository participant shall make the application along with such additional information through the recognised stock exchange, recognised clearing corporation, recognised depository, as the case may be. (2) The recognised stock exchange, the recognised clearing corporation or the recognised depository, as the case may be, shall examine the eligibility of the applicant in terms of these regulations, applicable Acts, rules, regulations and bye-laws, and forward the application to the Authority along with its r....
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.... framework. (4) Where an entity intends to operate as a capital market intermediary in multiple categories covered under these regulations, it shall maintain the highest of the applicable minimum net worth requirements, unless otherwise specified by the Authority. Explanation: Where a CMI is required to infuse capital to comply with the revised minimum net worth requirements specified in these regulations, such entity shall ensure compliance by October 01, 2025 or any other date as may be specified by the Authority. 8. Fit and proper requirements (1) A capital market intermediary shall ensure that the entity and its principal officer, directors/ designated partners, key managerial personnel and controlling shareholders are fit and proper persons, at all times. (2) For the purpose of sub-regulation (1), a person shall be deemed to be a fit and proper person if, - (a) such person has a record of fairness and integrity, including but not limited to- (i) financial integrity; (ii) good reputation and character; and (iii) honesty. (b) such person has not incurred any of the following disqualifications - ....
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....al qualification or post-graduate degree or post graduate diploma (minimum one year in duration) in finance, law, accountancy, business management, commerce, economics, capital market, banking, insurance or actuarial science from a university or an institution recognised by the Central Government or any State Government or a recognised foreign university or institution or association or a CFA or a FRM from Global Association of Risk Professionals or any other relevant educational qualifications as may be specified by the Authority: Provided that a graduation degree in any field from a university or an institution recognised by the Central Government or any State Government or a foreign university would suffice where the principal officer or the compliance officer has a work experience of at least ten years in the financial services market: Provided further that a person who has a qualification of Bachelor of Law from a university, or an institution recognised by the Central Government or any State Government or a recognised foreign university or institution or association is also eligible for appointment as a compliance officer: Provided further that, in ....
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....ions under these regulations. (8) Where an entity has multiple registrations under these regulations, the principal officer shall be appointed/ designated for each such registration separately: Provided that an entity with registration as broker dealer, clearing member and depository participant may have the same person as principal officer for these activities: Provided further that an entity with registration as credit rating agency and ERDPP may have the same person as principal officer for these activities. (9) Where an entity has multiple registrations under these regulations, the entity may have the same person as compliance officer for ensuring compliances with all the applicable regulatory and legal requirements for its activities as capital market intermediary in the IFSC. Provided further that the Authority may review sub-regulations (8) and (9) based on the size, scale and complexity of business activities of the intermediaries and may specify revised norms in this regard. 10. Furnishing of Information (1) The Authority may require the applicant to furnish any further information or clarification regarding itself or nature ....
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....deems fit in the interest of the investors or orderly development of the securities market, in an IFSC. (5) The registration granted to a CMI may be withdrawn by the Authority only after giving a reasonable opportunity of being heard. 13. Period of validity The certificate of registration granted to a CMI shall be perpetual unless it is suspended or cancelled by the Authority. 14. Surrender of registrations A CMI may file an application with the Authority for surrender of its registration: Provided that a trading member or clearing member or depository participant shall make such application through the recognised stock exchange or recognised clearing corporation or recognised depository, as the case may be: Explanation. - The voluntary surrender of certificate of registration shall be effective only after its acceptance by the Authority. CHAPTER III GENERAL OBLIGATIONS AND RESPONSIBILITIES 15. Code of Conduct A CMI shall abide by the Code of Conduct as specified in Schedule II. 16. Maintenance of books of account, records and other documents (1) A CMI shall maintain and preserve the following books of....
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....aterial change to operations, structure, business, or location. (3) A CMI shall conduct an annual review of its business continuity plan. 21. Cyber Security and Cyber Resilience A CMI shall have robust cyber security and cyber resilience framework in accordance with the requirements as may be specified by the Authority. 22. Risk Management and Internal Controls (1) A CMI shall have a sound risk management system for comprehensively managing risks. (2) A CMI shall have adequate internal procedures and controls, given the types of business in which it engages (including any activities which have been outsourced) with the aim of protecting the interests of clients and their assets and ensuring proper management of risk. 23. Change in control (1) Where a CMI is operating in the form of branch in an IFSC, it shall intimate the Authority, and the market infrastructure institution of which it is a member (if applicable), within fifteen days of any direct or indirect change in control of the intermediary. (2) Where a CMI is incorporated in an IFSC, it shall seek prior approval of the Authority, in case of any direct or indirect chang....
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.... (4) A registered credit rating agency shall continuously monitor the rating of securities or other permitted financial products and carry out periodic reviews of the rating, unless the rating is withdrawn. (5) A registered credit rating agency shall generally not withdraw a rating so long as the obligations under the security /instrument/ facility rated by it are outstanding: Provided that a registered credit rating agency may withdraw a rating in the following situations: (a) Where the entity whose security/instrument/facility is rated is wound up or merged or amalgamated with another entity, (b) In case of non-cooperation from the issuers, or non-payment of agreed fee, (c) At the request of an issuer, except where such request might give rise to avoiding an imminent rating change, or (d) Where such credit rating agency is constrained from providing service due to events beyond its control: Provided further that the reason for withdrawal of rating shall be mentioned in the press release issued by the registered credit rating agency withdrawing such rating. (6) A registered credit rating agency shall d....
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....ing of the subscription list for issue of debentures. (2) A person shall not be appointed as a debenture trustee, in cases where the debenture trustee is an associate of the issuer or is likely to have conflict of interest in any manner. (3) A registered debenture trustee shall ensure that: (a) It accepts the trust deed which shall contain details on standard information pertaining to the debt issue and details specific to the particular debt issue and shall not contain covenants prejudicial to the interest of the debenture holders; (b) The trust deed is consistent with the terms of the proposed issue of debentures; (c) It calls for periodical reports/ performance report from the issuer company within seven days of the relevant board meeting or within forty five days of the respective quarter whichever is earlier; (d) It calls for reports on the utilization of funds raised by the issue of debentures; (e) It communicates to the debenture holder defaults, if any, in respect of the payment of interest or redemption of debentures and actions taken thereunder; (f) It appoints a nominee director on the board of the i....
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....ecified by the Authority from time to time. (5) No debenture trustee shall relinquish its assignment as debenture trustee in respect of the debenture issue of any issuer, unless and until another debenture trustee is appointed in its place by the issuer. 31. Depository Participants (1) A depository participant shall ensure compliance with the applicable laws, including bye-laws, rules and regulations specified by the recognised depository. (2) A depository participant shall ensure that separate accounts are opened in the name of each of the beneficial owners and the securities of each beneficial owner shall be segregated, and shall not be mixed up with the securities of other beneficial owners or with the participant's own securities. (3) A depository participant shall have adequate mechanisms for the purpose of reviewing, monitoring and evaluating its internal accounting controls and systems. (4) Where the records are maintained in electronic form, a depository participant shall ensure that the integrity of the data processing system is maintained at all times. (5) A depository participant shall reconcile its records with th....
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....l collectively mean and include capital market products and capital market services; and (c) "capital market services" shall mean and include investment advisory services, portfolio management services, by whatever name called, provided by a service provider which is a regulated financial entity, and such other services as may be specified by the Authority. (2) For distribution of capital market products and/or services offered by a regulated financial entity to all types of clients, the registered distributor shall ensure that such products or services have been authorised, vetted or approved for offering to all types of investors, by the relevant regulatory or supervisory authority of such regulated financial entity: Explanation: For the purpose of this regulation, "regulated financial entity" means an issuer or a service provider set up in India, an IFSC or any Foreign Jurisdiction, which is registered, authorised, licensed or regulated by any regulatory or supervisory authority of its home jurisdiction for carrying out activities related to asset management, funds management, investment advisory, portfolio management or any other similar activity, by ....
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....pt and implement written policies and procedures designed to address and protect all non-public information received from or communicated to it by any entity, or its agents, related to their ESG Ratings and ESG Data Products, in a manner appropriate in the circumstances. (f) Principles on Engagement (Systems and Controls) i. ERDPP shall regularly consider whether its information gathering processes with entities covered by its products lead to efficient information procurement for both the providers and these entities. Where potential improvements to information gathering processes are identified, the ERDPP shall consider what measures can be taken to implement them. ii. Where feasible and appropriate, the ERDPP shall respond to and address issues flagged by entities covered by its ESG Ratings and Data Products and by users while maintaining the independence and integrity of these products. (4) An ERDPP shall disclose compliance of the "Code of Conduct" provided above on a "comply" or "explain" basis on its website. (5) An ERDPP providing ESG Ratings shall have guidelines / criteria / methodology on the rating process and the same shall ....
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....s in advance of entering into such transaction. (7) An investment adviser shall not act on its own account, knowingly to sell securities or investment products to or purchase securities or investment products from a client. (8) An investment adviser shall ensure that, for the purposes of risk profiling, - (a) it obtains such information from the client as is necessary for the purpose of giving investment advice; (b) it has a process for assessing the risk a client is willing and able to take; (c) risk profile of the client is communicated to the client after completion of risk assessment; and (d) the information provided by clients and their risk assessment is updated periodically. (9) An investment adviser shall ensure that all investments on which investment advice is provided is suitable to the risk profile of the client and is consistent with the client's investment objectives and financial position. (10) An investment adviser shall have client level segregation for investment advisory and distribution services. (11) An investment adviser shall maintain an arm's length relationship between its acti....
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....ding in relation to amount of underwriting obligations and commission, allocation of duties and responsibilities, timelines and other relevant details. (b) At any point of time, the total underwriting obligations under all the agreements shall not exceed twenty times the net worth of the investment banker. 36. Research Entities (1) A research entity shall have written internal policies and control procedures governing the dealing and trading by any employee for: (a) addressing actual or potential conflict of interest arising from such dealings or trading of securities of subject company; (b) promoting objective and reliable research that reflects unbiased view of research analyst; and (c) preventing the use of research report or research analysis to manipulate the financial market. (2) A research entity shall ensure that the procedures or controls designed to manage actual or potential conflicts of interest are based on the nature, scale and complexity of the business. (3) The internal policy should ensure that the conflicts of interest are identified and adequately addressed so that the quality of the research repor....
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.... (c) any material business relationship with the subject company over the past 12 months that may result in conflict of interest; and (d) any other material conflict of interest relating to the subject company. (13) A research entity shall take steps to ensure that facts in its research reports are based on reliable information and shall define the terms used in making recommendations, and these terms shall be consistently used. (14) A research entity shall have adequate documentary basis, supported by research, for preparing a research report. (15) Where a research entity employs a rating system, it must clearly define the meaning of each such rating including the time horizon and benchmarks on which a rating is based. CHAPTER V INSPECTION 37. Inspection (1) The Authority may suo motu or upon receipt of information or complaint at any time appoint one or more persons as inspecting authority to undertake the inspection of the books, accounts, records, documents, infrastructure, procedures and systems of a CMI, for any purpose, including the purposes as specified under sub-regulation (2). (2) The purposes referred to in ....
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....ith the inspection and allow the inspecting authority to have reasonable access to its premises and extend reasonable facility for examining any books of accounts, records and documents in its possession, and also provide copies of records or documents or other material which in the opinion of the inspecting authority are relevant for the purposes of the inspection. (3) The Inspecting Authority, in the course of inspection, shall be entitled to examine or record the statements of any principal officer, partner, designated partner, trustee, director, chairperson, officer, employee and any agent of the CMI. (4) It shall be the duty of every principal officer, partner, designated partner, trustee, director, chairperson, CEO, KMPs, officer, employee and any agent of the CMI to give to the inspecting officer all assistance in connection with the inspection, which the inspecting officer may require. 39. Inspection by third parties (1) The Authority may appoint any person to inspect the books of account, records, documents infrastructures, systems and procedures or affairs of a CMI: Provided that such person so appointed shall have the same powers of....
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.... take such action as deemed fit, including suspension, against a depository participant, in accordance with the applicable laws. 42. Power to call for information The Authority may call for any information, documents or records from a CMI. 43. Power to remove difficulties In order to remove any difficulties in the interpretation or application of the provisions of these regulations, the Authority may issue directions through guidance notes or circulars. 44. Power to relax strict enforcement of the regulations (1) The Authority may, in the interest of development and regulation of financial services market in IFSC, relax the strict enforcement of any requirements of these regulations. (2) For seeking relaxation under sub-regulation (1), an application, giving details and the grounds on which such relaxation has been sought, shall be filed with the Authority along with a non-refundable fee as may be specified by the Authority. (3) The Authority shall process such application within thirty days of the date of receipt of the application complete in all respects and shall record reasons for acceptance or refusal of the relaxations so....
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.... regulations, superseded circulars or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the repealed regulations, any penalty incurred in respect of any violation committed against the repealed regulations, or any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty as aforesaid, shall remain unaffected as if the repealed regulations have never been repealed. (4) After the repeal of International Financial Services Centres Authority (Capital Market Intermediaries) Regulations, 2021, any reference thereto in any other regulations made, guidelines or circulars issued thereunder by the Authority, any act of the Government of India or laws enacted by other statutory authorities shall be deemed to have the reference to the corresponding provisions of these regulations. (5) Save as otherwise contained in sub-regulation (2), the circulars or guidelines issued by Authority under the International Financial Services Centres Authority (Capital Market Intermediaries) Regulations, 2021, shall be deemed to have been issued under these regulati....
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....make adequate disclosure of its possible conflict of interest and duties and shall put in place a mechanism to resolve any conflict of interest situation. 10. A CMI shall not indulge in any unfair competition, which is likely to harm the interests of other capital market intermediaries and investors. 11. A CMI shall not discriminate amongst its clients, save and except on ethical and commercial considerations. 12. A CMI shall ensure that any change in registration status/any penal action taken by Authority or any material change in financials which may adversely affect the interests of clients/investors is promptly informed to the clients. 13. A CMI shall inform the Authority promptly about any action initiated against it in respect of material breach or non-compliance of any law, regulations and direction issued by the Authority or any other regulatory body. 14. A CMI shall ensure that it and any of its employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, unless a disclosure of its interest in the said security has been made while rendering such advice. 15. A CMI shall ensure that it or any ....
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....ognised stock exchange from time to time as may be applicable. 2. A clearing member shall abide by all the provisions of the Act and the rules, regulations and bye-laws issued by the Government of India, the Authority and the recognised clearing corporation from time to time as may be applicable. 3. A broker dealer shall not involve itself in excessive speculative business in the market beyond reasonable levels not commensurate with its financial soundness. 4. A broker dealer shall faithfully execute the orders for buying and selling of securities at the best available price and not refuse to deal with a small investor merely on the ground of the volume of business involved. 5. A broker dealer shall promptly inform its client about the execution or non-execution of an order, and make prompt payment in respect of securities sold and arrange for prompt delivery of securities purchased by its clients. 6. A broker dealer shall issue without delay to its client a contract note for all transactions in the form specified by the recognised stock exchange. 7. A broker dealer shall not encourage sales or purchases of securities with the s....
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....rticipating in the rating analysis, and that of its clients. 9. A registered credit rating agency shall ensure that there is no misuse of any privileged information including prior knowledge of rating decisions or changes. 10. A registered credit rating agency shall develop its own internal code of conduct for governing its internal operations and laying down standards of appropriate conduct for its employees and officers in the carrying out of their duties within the credit rating agency and as a part of the industry. C. Custodians 1. A custodian shall be prompt in distributing dividends, interest or any such accruals of income received or collected by it on behalf of its clients on the securities held in custody. 2. A custodian shall be continuously accountable for the movement of securities or financial products in and out of the custody account, deposit, and withdrawal of cash from the client's account and shall provide complete audit trail, whenever called for by the client or the Authority. 3. A custodian shall establish and maintain adequate infrastructural facility to be able to discharge custodial services to the satisfac....
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....neficial owners. 3. A depository participant shall take adequate and necessary steps to ensure that continuity in data and record keeping is maintained and that the data or records are not lost or destroyed. It shall also ensure that for electronic records and data, up-to-date back up is always available with it. 4. A depository participant shall ensure that it has satisfactory internal control procedures in place as well as adequate financial and operational capabilities which can be reasonably expected to take care of any losses arising due to theft, fraud and other dishonest acts, professional misconduct or omissions. F. Distributors 1. A registered distributor shall avoid malpractices, such as mis-selling of capital market products and services, and shall consider clients' interest and suitability to their financial needs. 2. When dealing with clients other than sophisticated investors, a registered distributor shall undertake due diligence of capital market products and services being distributed to them, and also assess the suitability of product / service to the investors. For this purpose, a distributor shall seek information from such....
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....s submitted by the client, including inserting, deleting, or changing any information in the application form or any other document provided by the client. 11. A registered distributor shall provide to its clients full and latest information about the capital market products and services offered by the regulated financial entities and shall clearly highlight the assumptions made in performance calculations, risk assessments, performance projections etc. 12. A registered distributor shall abstain from giving any assurance or cause any misrepresentation to its clients with respect to returns or risk characteristics of a capital market product or service. 13. A registered distributor shall abstain from attracting clients through offer of rebate, kickback, gifts, etc. 14. A registered distributor shall maintain necessary infrastructure to provide support to its clients and regulated financial entities, so as to be able to satisfactorily discharge its responsibilities as per the mutually agreed terms. 15. A registered distributor shall ensure clear segregation of its proprietary investments and those carried out as part of distribution activi....
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.... principal officer and other employees. Advertisement Code for Distributors 26. Advertisements shall be accurate, true, fair, clear, complete, unambiguous and concise. 27. Advertisements shall not contain statements which are false, misleading, biased or deceptive, based on assumption/projections and shall not contain any testimonials or any ranking based on any criteria. 28. Advertisements shall not be so designed as likely to be misunderstood or likely to disguise the significance of any statement. Advertisements shall not contain statements which directly or by implication or by omission may mislead the client. 29. Advertisements shall not carry any slogan that is exaggerated or unwarranted or slogan that is inconsistent with or unrelated to the nature and risk and return profile of the capital market product or service. 30. Advertisements shall not be so framed as to exploit the lack of experience or knowledge of the clients. Extensive use of technical or legal terminology or complex language and the inclusion of excessive details which may detract the clients should be avoided. 31. Advertisements shall contain informatio....