OVERVIEW
- The International Financial Services Centres Authority (IFSCA) has issued the “Master Circular for Broker Dealers and Clearing Members” on May 12, 2026, with the objective of consolidating the regulatory framework applicable to Broker Dealers and Clearing Members operating in GIFT IFSC into a single comprehensive instrument.
- Over the past five years, IFSCA issued various circulars governing the registration, supervision, conduct and operational requirements of these intermediaries. The Master Circular now consolidates all such circulars into a single unified framework.
- Further, the Master Circular supersedes all applicable circulars issued by Securities and Exchange Board of India (“SEBI”) prior to October 01, 2020, insofar as they relate to Broker Dealers and Clearing Members registered with IFSCA.
- The Circular is organised into eleven chapters covering the complete regulatory framework for Broker Dealers and Clearing Members, including registration, compliance, technology, conduct and surrender of registration.
STREAMLINED REGISTERATION THROUGH SWITS
- IFSCA has operationalised the Single Window IT System (“SWITS”) along with a Common Application Form (“CAF”), enabling online registration, SEZ approvals, GST registration and USD fee payments through a single platform. Entities may also obtain a Unified Registration for multiple capital market activities.
GOVERNANCE STANDARDS
- Broker Dealers and Clearing Members are required to appoint a Principal Officer and a Compliance Officer based in the IFSC to oversee the entity’s operations and ensure compliance with applicable regulatory requirements.
- They are also required to adopt a Code of Conduct in line with Schedule II of the CMI Regulations.
RISK-BASED SUPERVISORY FRAMEWORK
- Stock exchanges and clearing corporations are required to establish a policy for periodic and ad-hoc inspections of members, along with information-sharing mechanisms across MIIs to ensure coordinated supervision.
- They must also maintain a continuous risk-based assessment framework to monitor evolving member risks.
TIERED SYSTEM AUDIT FRAMEWORK
- System audits of Broker Dealers are required to be conducted annually under separate Terms of Reference prescribed for Type I, Type II and Type III terminals, Auditors may undertake such audits for a maximum period of three years, followed by a mandatory cooling-off period of two years before reappointment.
CLIENT ASSET PROTECTION
- Broker Dealers are required to maintain separate accounts for proprietary funds and client funds, and any commingling shall constitute a material breach of fiduciary obligations.
- Client collateral may be used only towards the respective client’s margin or settlement obligations, and any diversion of such collateral is strictly prohibited.
BUSINESS CONTINUITY AND DISASTER RECOVERY
- Identified Broker Dealers are required to establish and maintain robust BCP-DR infrastructure, supported by a comprehensive policy framework prescribing standard operating procedures for disruption scenarios.
MARKET ACCESS THROUGH AUTHORIZED PERSON
- Broker Dealers are permitted to provide market access to investors through Authorized Persons located in foreign jurisdictions.
- Further, IFSCA-registered Broker Dealers may also provide market access to resident Indian investors under the Liberalised Remittance Scheme (“LRS”) through Authorized Persons based in India.
PERIODIC REPORTING AND COMPLIANCE AUDIT
- Broker Dealers and Clearing Members are required to submit quarterly reports to their respective stock exchange or clearing corporation. They must also undergo an annual compliance audit by a qualified professional, with the audit report to be submitted to IFSCA by 30th September each year.
CONCLUSION
- The Master Circular issued by IFSCA for Broker Dealers and Clearing Members represents a significant step towards regulatory consolidation and clarity.
- By consolidating multiple circulars and guidelines into a single, well-structured framework, it considerably eases the compliance burden for capital market intermediaries operating in GIFT IFSC.
- In addition to streamlining key processes such as registration, reporting, and operational compliance, the circular establishes comprehensive standards relating to technology governance, risk management, and investor protection.
- The framework is closely aligned with international best practices and further strengthens the transparency, integrity, and operational efficiency of the financial ecosystem within the IFSC.
