SEBI Eases Entry for Stock Brokers into GIFT City IFSC

Streamlined Framework Allows Operations Without Prior Approval

Overview

  • In a major facilitative move, SEBI has announced that Stock Brokers are no longer required to seek prior approval to operate in the International Financial Services Centre (IFSC) at GIFT City.
  • They can now set up a Separate Business Unit (SBU) under their existing stock broking entity to carry out securities market-related activities.
  • Additionally, a branch of the Broking entity can also qualify as an SBU, provided it meets the prescribed eligibility criteria.

This regulatory relaxation is expected to significantly simplify and accelerate access for Indian Stock Brokers to tap into International markets through GIFT-IFSC.

Understanding the SBU (Separate Business Unit)

  • A Separate Business Unit (SBU) refers to a distinct business line within a stock broking entity that is allowed to operate independently in the GIFT City IFSC.

To ensure transparency and regulatory compliance, SBUs are required to maintain separate accounts on an arm’s length basis from the parent entity.

Moreover, the net worth of the SBU must be kept segregated from the Stock Broker’s Indian market operations and will be determined in accordance with the regulatory framework prescribed by the authority governing GIFT-IFSC.

How This Helps India’s Global Financial Aspirations

  • SEBI’s move to ease entry for Stock Brokers into GIFT-IFSC plays a pivotal role in advancing India’s vision of becoming a global financial powerhouse.

By promoting GIFT City as a world-class trading hub, the circular encourages greater participation from Domestic Stock Brokers seeking international exposure.

  • The relaxation reduces regulatory overhead, accelerates market entry, and simplifies compliance procedures. Ultimately, this contributes to enhancing the overall ease of doing business within the IFSC framework, aligning with India’s broader goal of strengthening its global financial footprint.

CONCLUSION

  • By eliminating the requirement for prior approval and allowing operations through a Separate Business Unit (SBU), the regulator has simplified entry, reduced compliance burdens, and offered operational flexibility.
  • The option to transition from existing subsidiaries or joint ventures to SBUs further enhances cost-efficiency and streamlines business models.
  • Overall, this move aligns with India’s broader strategy to position GIFT-IFSC as a globally competitive financial hub and foster increased participation from domestic market players in the international arena.

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