Transforming Financial Services in IFSC
OVERVIEW
- The 23rd meeting of the IFSCA Authority was held on March 26, 2025, at the International Financial Services Centre (IFSC), where significant regulatory updates were approved.
- These updates focus on enhancing the regulatory framework for capital market intermediaries, KYC registration agencies, and fund management.
- The new regulations enhance compliance, streamline operations, and align IFSC with global standards for a stronger, more transparent financial ecosystem.
IFSCA (Capital Market Intermediaries) Regulations, 2025
- The IFSCA (Capital Market Intermediaries) Regulations, 2025 introduce Research Entity, remove Account Aggregator, and enhance market oversight and efficiency.
- It also formally regulates Distributors and ESG Ratings and Data Product Providers (ERDPP), ensuring greater transparency and compliance.
- Credit Rating Agencies (CRAs) must obtain separate registration for ERDPP activities. These updates align IFSC regulations with global standards, enhancing supervision and operational efficiency.
Compliance, Global Access & Net Worth Updates
- The 2025 regulations set minimum qualifications and experience for Principal & Compliance Officers, enhancing regulatory standards.
- While separate Principal Officers are required for multiple registrations, some exceptions apply, and a common Compliance Officer is allowed for now, subject to review.
- Global Access remains unchanged pending further discussions. Branch operations must earmark minimum net worth at the parent level for their IFSC branch.
- Only liquid assets qualify. Minimum net worth: $200K (CRAs), $25K (Advisers), $100K (Bankers), separate from other obligations.
KYC Regulations
- The IFSCA (KYC Registration Agency) Regulations, 2025 establish a registration and regulatory framework for KYC Registration Agencies (KRAs) in IFSC.
- KRAs must meet eligibility, net worth, and qualification requirements while adhering to strict compliance obligations.
- All IFSCA-regulated entities must upload KYC records to the KRA, with some exemptions. These measures enhance onboarding, due diligence, and regulatory efficiency in IFSC.
Transition to IFSCA (Fund Management) Regulations, 2025
- The IFSCA (Fund Management) Regulations, 2025 introduce key approvals for fund managers, including a one-time extension for expired private placement memoranda, subject to specific conditions.
- Additionally, the regulations provide clarifications on filing updated private placement memoranda in line with the new framework.
- These changes aim to facilitate ease of doing business while ensuring regulatory compliance within IFSC.
CONCLUSION
- The 23rd IFSCA Authority Meeting marks a significant step toward enhancing regulatory clarity, market efficiency, and investor confidence.
- By refining compliance norms, introducing structured frameworks, and promoting global alignment, these updates reinforce IFSC’s position as a premier international financial hub.
- With a focus on ease of doing business and robust supervision, the new regulations pave the way for a more transparent, well-regulated, and competitive financial ecosystem in IFSC.
