TaxTMI 
TaxTMI 
International Financial Services Centres Authority (Capital Market Intermediaries) Regulations, 2025
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....icial 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 Undivided Family wherein the first is also a member; or (vi) such other cases where th....
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....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 in an IFSC; (n) "custodian" means a person who carries on or proposes to carry on the business of providing custodial services and is registered as a custodian with the Authority under these regulations....
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....ancial 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 clients or other persons or group of persons and includes any person who holds out himself as an investment adviser, by whatever name called, and is registered with the Authority as an investment adviser under these regulations; (aa) "investment banker" means a person who is in the business of issue management either b....
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....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 public offer, providing a basis for investment decision and does not include the following communications: (i) comments on general trends in the securities market; (ii) discussions on the broad-based indices; (iii) commentaries on economic, political or market conditions; (iv) periodic reports or other communications prepared for unit holders of mutual fund or alternative investment fund or retail fund or non-retail fund or clients of portfolio managers and investment advisers....
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.... 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 where such comments do not specify any particular securities or investment product; (ii) an insurance agent or an insurance broker registered with the Authority, who offers investment advice solely in insurance products; (iii) a distributor of funds providing any investment advice to its clients incidental to its primary activity; (iv) a member of the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India, the Institute of Cost Accountants of India, the Institute of Actuaries of India or any other professional body as may be specified by the Authority, who provides investment advice, either independently or as an employee of an entity, ....
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....epository, 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 recommendation no later than thirty days of receipt of the complete application. (3) An application which is not complete in all respects shall be liable to be rejected. (4) Subject to approval by the concerned recognised stock exchange, and without any requirement of a separate certificate of registration, - (a) a clearing member may be permitted to act as a broker dealer in a recognised stock exchange; and (b) a broker dealer may be permitted to operate in more than one recognised stock exchange. (5) Subject to approval by the concerned recognised clearing corporation, and without any requirement of a separate certificate of registration, - (a) a broker dealer may be permitted to act as a clearing member in a recognised clearing corporation; and (b) a clearing member may be permitted to operate in more than one recognised clearing....
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....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 - (i) the person has been convicted by a court of law for any offence involving moral turpitude or any economic offence or any offence against securities laws; (ii) charge sheet has been filed against such person by any Indian enforcement agency in matters concerning economic offences and is pending; (iii) charges have been framed by a court of law or an equivalent institution in matters concerning economic offences; (iv) a recovery proceeding has been initiated against the person by a financial regulatory authority and is pending; (v) an order has been passed against the person for malfeasance; (vi) the person has been declared insolvent and not discharged; (vii) an order restraining, prohibiting or debarring the person from accessing or dealing in financial product(s) or financial service(s), has been passed by any regulatory authority, in any matter concerning securities laws or financial services market and such order is in force; (viii) any other order against the person, which has a mate....
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.... officer: Provided further that, in respect of a principal officer of a distributor or an investment adviser or a research entity, a graduate degree in any field from a university or an institution recognised by the Central Government or any State Government or a foreign university along with a certification as a Certified Financial Planner from Financial Planning Standards Board shall also suffice. Explanation. - For the purposes of these regulations, the professional qualification shall include membership of Institute of Chartered Accountants of India, Institute of Company Secretaries of India, Institute of Cost Accountants of India or any institution equivalent thereto in a Foreign Jurisdiction. (3) A capital market intermediary shall ensure that the principal officer and compliance officer meet the following experience requirements: (a) A principal officer shall have an experience of at least three years in the financial services market: Provided that a person having a work experience of at least one year in ESG related activities may also be eligible for appointment as principal officer of an ERDPP. (b) A compliance officer shall have an experience of at least two ye....
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....sider the application for grant of a certificate of registration. (2) If required by the Authority, the applicant shall appear before the Authority for personal representation. (3) If required, the Authority may undertake an inspection of the office of the applicant before the grant of a certificate of registration. 11. Registration requirements The Authority shall take into account all matters which it deems relevant for grant of registration to a CMI including the following: (a) the applicant or its principal officer and compliance officer have the specified qualification and adequate work experience; (b) the applicant has the necessary infrastructure like adequate office space, equipment, communication facilities and manpower to effectively discharge its activities; (c) the applicant satisfies the eligibility criteria, net worth and fund allocation requirements, if applicable, as specified in these regulations; (d) the applicant has satisfactory financial credit worthiness; and (e) the applicant and its principal officers, directors/ designated partners, key managerial personnel and controlling shareholders are fit and proper persons. 12. Grant of registration....
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....ount for each accounting period; (c) a copy of the auditor's report on the accounts for each accounting period; (d) a statement of net worth for each quarter; (e) documentation relating to compliance with the IFSCA (Anti Money Laundering, Counter Terrorist Financing and Know Your Customer) Guidelines, 2022; (f) documents relating to account opening of each client and any power of attorney or signature authority forms of the clients; (g) relevant records and documents relating to its activities in capital markets; (h) records relating to complaint handling and grievance redressal; (i) such other books of accounts, records and documents as may be specified by the Authority from time to time. 17. Information to the Authority (1) A CMI shall furnish to the Authority any material change in the information or particulars previously furnished along with the application, which has a bearing on the certificate of registration granted to it. (2) A CMI shall intimate to the Authority any change in principal officer, compliance officer or key managerial personnel to the Authority, within 15 days of such change. (3) A CMI shall furnish such reports, returns, statements and....
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....a or a member of the Institute of Company Secretaries of India or a member of the Institute of Cost Accountants of India or any person authorised to conduct audit in a Foreign Jurisdiction. (2) A copy of such compliance audit report for a financial year shall be furnished to the Authority by the 30th of September of such year: Provided that a trading member, a clearing member and a depository participant shall also file a copy of such report to the recognised stock exchange, recognised clearing corporation and depository, as the case may be. (3) A CMI shall have additional audits and submit such reports as may be specified by the Authority from time to time. CHAPTER IV SPECIFIC OBLIGATIONS AND RESPONSIBILITES 26. Broker dealers and Clearing members (1) A broker dealer shall ensure compliance with the applicable laws, including bye-laws, rules and regulations specified by the recognised stock exchange. (2) A clearing member shall ensure compliance with the applicable laws, including bye-laws, rules and regulations specified by the recognised clearing corporation. 27. Global Access A CMI, including a broker dealer, desirous of dealing in securities in Foreign Juri....
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....(8) A registered credit rating agency shall make available to the general public, the information relating to the rationale of the ratings, which shall cover an analysis of various underlying factors. (9) A registered credit rating agency shall specify the rating process and file a copy of the same to the Authority for record. (10) A registered credit rating agency shall have professional rating committees, comprising members who are adequately qualified and knowledgeable to assign a rating, and all rating decisions shall be taken by the said committee. (11) A registered credit rating agency shall exercise due diligence to ensure that the rating given by it is fair and appropriate. (12) A registered credit rating agency shall not rate securities or other permitted financial products issued by it or any of its group entity. (13) A registered credit rating agency shall have appropriate procedures and systems for preventing trading on the basis of unpublished price sensitive information obtained by them in the course of any professional assignment. 29. Custodians (1) A custodian shall separate and segregate its custodian activities from all other activities. (2) A cust....
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....and of the guarantors are sufficient to discharge the interest and principal amount at all times and such assets are free from any other encumbrances except those which are specifically agreed to by the debenture holders; (j) It shall perform all acts necessary for the enforcement of the security and for protection of the interest of the debenture holders; (k) It shall call for reports on the utilization of funds raised by the issue of debentures; (l) It takes steps to convene a meeting of debenture holders as and when required; (m) The debentures have been converted or redeemed in accordance with the terms of the issue of debentures; (n) It takes possession of the trust property in accordance with the terms of the trust deed; (o) The debentures have been credited in the demat accounts of the debenture holders; (p) Debenture holders have been paid the interest due on the debentures and the monies due to them on the date of redemption of the debenture; (q) It informs the Authority immediately of any breach of trust deed or provision of any applicable laws; (r) It obtains reports from the lead bank regarding the progress of the project; and (s) It may inspect book....
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.... and/or services offered by any issuer or service provider, respectively, which is set up in India, IFSC or any foreign jurisdiction may be distributed to sophisticated investors in IFSC or foreign jurisdictions; (c) Distribution of capital market products and/or services to any client in India: The capital market products and/or services offered by any regulated financial entity set up in IFSC, jurisdictions which are identified in the notification published in the Gazette of India vide no. G.S.R. 882(E) dated November 28, 2019, as may be revised from time to time, or any other jurisdiction as may be specified by the Authority, may be distributed to any client in India; (d) Distribution of capital market products and/or services to sophisticated investors in India: The capital market products and/or services offered by any issuer or service provider, respectively, which is set up in IFSC or any foreign jurisdiction, may be distributed to sophisticated investors in India; and (e) Any other activities as may be specified by the Authority. Explanation: For the purpose of distribution activities under these regulations, (a) "capital market products" shall mean "securities" a....
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....nduct. (b) Principle on Securing Quality (Systems and Controls) ERDPP shall adopt and implement written policies and procedures designed to help ensure the issuance of high quality ESG Ratings and Data Products. (c) Principles on managing Conflicts of Interest i. ERDPP shall adopt and implement written policies and procedures designed to help ensure that its decisions are independent, free from political or economic interference, and appropriately address actual or potential conflicts of interest that may arise from, among other things, ERDPP's organisational structure, business or financial activities, or the financial interests of the ERDPP, its officers and employees. ii. ERDPP shall also identify, avoid or appropriately manage, mitigate and disclose actual or potential conflicts of interest that may compromise the independence and integrity of the ERDPP's operations. (d) Principle on Transparency ERDPP shall make adequate levels of public disclosure and transparency a priority for its ESG Ratings and Data Products, including its methodologies and processes to enable the users of the product to understand what the product is and how it is produced, including any....
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....issuer of products/securities; (c) all material facts relating to the key features of the products or securities, particularly performance track record; and (d) warnings, disclaimers in documents and advertising materials relating to an investment product which it is recommending to the client. (3) An investment adviser shall act in a fiduciary capacity towards its clients and shall disclose all conflicts of interest as and when they arise. (4) An investment adviser shall not receive any consideration by way of remuneration or compensation or in any other form from any person other than the client being advised, in respect of the underlying products or securities for which advice is provided. (5) An investment adviser shall maintain an arm's-length relationship between its activities as an investment adviser and its other activities. (6) An investment adviser shall not enter into transactions on its own account which is contrary to the advice given to its clients for a period of 15 days from the day of such advice: Provided that during the period of 15 days, if the investment adviser is of the opinion that the situation has changed, then it may enter into such a trans....
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....g of the issue or offer, if the investment banker is a promoter or an associate of the issuer of securities or of any person making an offer to sell or purchase securities in terms of any regulations made by the Authority. (4) No investment banker or any of its principal officer, directors, partner or manager shall either on their respective accounts or through their associates or relatives enter into any transaction in securities of issuer on the basis of unpublished price sensitive information obtained by them in the course of any professional assignment. (5) An investment banker shall submit to the Authority complete particulars of any transaction for acquisition of securities of any body corporate whose issue is being managed by that investment banker within fifteen days from the date of entering into such transaction. (6) An investment banker may act as an underwriter of an issue in an IFSC, subject to the following conditions: (a) An investment banker acting as an underwriter, shall enter into an agreement with the issuer of securities, on whose behalf it is acting as an underwriter, which shall have the understanding in relation to amount of underwriting obligations ....
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....try or sector or group of companies or business group as consideration to commence or influence a business relationship or for the receipt of compensation or other benefits. (11) A research entity shall ensure that the information provided in the report is complete, concise and specific such that investors can understand the actual or potential conflicts of interest and their likely impact on the quality of the research report published. (12) A research entity shall disclose any material interest in the report that may create a potential conflict of interest and thereby affect the ability of the entity to maintain independence and objectivity: Explanation: The research entity shall disclose in the report if the research entity or the research analyst or his associate or his relative has: (a) any material financial interest in the subject company and the nature of such financial interest; (b) beneficial ownership of one or more per cent. of the securities of the subject company; (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 ....
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....ealer (trading member), a clearing member or a depository participant respectively, in accordance with its byelaws. (5) The Authority and the relevant market infrastructure institution may conduct joint inspection of a CMI. 38. Obligations of capital market intermediary on inspection (1) Where an inspection of a CMI is undertaken by the Authority, such CMI and every principal officer, proprietor, partner, designated partner, trustee, director, chairperson, officer, employee and any agent of the intermediary shall provide all assistance and cooperate with the inspection authority and shall furnish books of accounts, records and documents to the inspection authority with such statements and information relating to its activities within such time as decided by the inspection authority. (2) The CMI shall give all assistance as may be required in connection with 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 re....
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....esolve the complaints of investors or fails to give a satisfactory reply to the Authority; or (h) commits any other act/omission which in the opinion of the Authority warrants such action or which is against the interest of the investors. (2) Without prejudice to sub-regulation (1), a recognised stock exchange may take such action as deemed fit, including suspension, against a broker dealer (trading member), in accordance with the applicable laws. (3) Without prejudice to sub-regulation (1), a recognised clearing corporation may take such action as deemed fit, including suspension, against a clearing member, in accordance with the applicable laws. (4) Without prejudice to sub-regulation (1), a recognised depository may 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....
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....ed to have been done or taken including registration or approval granted, suspended or cancelled, fees collected, any adjudication, enquiry or investigation commenced or show-cause notice issued, under the repealed regulations, superseded circulars, shall be deemed to have been done or taken or commenced under the corresponding provisions of these regulations; (b) any application made to the Authority under the repealed regulations, prior to such repeal, and pending before it shall be deemed to have been made under the corresponding provisions of these regulations; (c) the previous operation of the repealed 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 (Capita....
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....the investors are dealt with in a timely and appropriate manner. 7. A CMI shall not make any exaggerated statement either oral or in written form to the client about its capability, qualification and achievement in regard to services rendered to the client. 8. A CMI shall maintain confidentiality with respect to the information about its clients, except where such disclosures are required to be made in compliance with any law for the time being in force. 9. A CMI shall avoid conflict of interest and 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 pro....
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....e grounds to believe that the recommendation is suitable. Part B In addition to compliance with the code of conduct as specified in Part A of this Schedule, the capital market intermediaries shall abide by the following code of conduct: A. Broker dealers / Clearing Members 1. A broker dealer shall abide by all the provisions of the Act and the rules, regulations and byelaws issued by the Government of India, the Authority and the recognised 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 ex....
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....y shall, wherever necessary, disclose to its clients, possible sources of conflict of duties and interests, which could impair their ability to make fair, objective and unbiased ratings. Further, a registered credit rating agency shall ensure that no conflict of interest exists between any member of the rating committee participating 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, depo....
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....cial owner account, dispatch of the dematerialisation request form, rematerialisation request form and execution of debit instruction slip and in all the other activities undertaken by them on behalf of the beneficial 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 prod....
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.... extent applicable. 10. A registered distributor shall abstain from tampering with the application form and other documents 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 segreg....
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.... experiences of its 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 information which is timely and co....