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Stock Exchange In GIFT City, IFSC

Global Overview:

 
The 19th century witnessed significant economic and industrial expansion, especially with the rise of railroads. This led to the establishment of stock exchanges in various cities to facilitate the trading of railroad company stocks and bonds.

The 20th century saw the globalization of financial markets, with exchanges around the world becoming increasingly interconnected. Electronic trading systems were introduced, transforming the nature of stock trading. The 21st century witnessed the emergence of cryptocurrency exchanges, providing platforms for the trading of digital assets such as Bitcoin and Ethereum.
 

Stock exchange history in India:

 
The Bombay Stock Exchange, established in 1875, is one of the oldest stock exchanges in Asia. It originated as the Native Share and Stock Brokers’ Association and adopted the name “Bombay Stock Exchange” in 1986. The BSE played a crucial role in channeling capital to industrial and economic development during the British colonial period
 
SEBI was established in 1988 as the regulatory body for the securities market in India. Its creation marked a significant milestone in the regulation and development of stock exchanges, ensuring investor protection and market integrity. In an effort to streamline operations and improve efficiency, several regional stock exchanges in India underwent mergers or closed operations. This trend aimed to consolidate trading activities on a national level


Regulatory Requirement to Set Up Stock Exchange in IFSC:

 
1.Application for seeking recognition:

No person shall conduct, organise or assist in organising any stock exchange, clearing corporation or depository in an IFSC unless he has obtained recognition from the Authority in accordance with these regulations.
A person seeking recognition as a market infrastructure institution in an IFSC shall be a company incorporated in an IFSC in compliance with the shareholding requirements prescribed under these regulations.

2.Requirements for grant of recognition:

(1) An applicant seeking recognition as a stock exchange or clearing corporation, as the case may be, shall comply with the following conditions, namely, –
 
(a) the applicant is a company limited by shares;

(b) the applicant is demutualized;

(c) the applicant, its directors and its shareholders who hold or intend to hold shares, are fit and proper persons as specified in these regulations;

(d) the applicant satisfies the requirements relating to the ownership and governance structure specified in these regulations;

(e) the applicant satisfies the net worth requirements specified in these
regulations;
 
(f) the applicant satisfies the requisite capability including its financial capacity, functional expertise and infrastructure.

(2) An applicant seeking recognition as a stock exchange shall, in addition to the conditions specified in sub-regulation (1), comply with the following conditions, namely, –

(a) the applicant has the necessary infrastructure for the orderly execution of trades;

(b) the applicant has an online screen-based trading system;

(c) the applicant has an online surveillance capability which monitors prices, volumes and positions in real time so as to ensure market integrity;

(d) the applicant has adequate infrastructure to list securities for trading on its platform, wherever applicable;

(e) the applicant has necessary capability to have a comprehensive network of trading members and has adequate facility to admit and regulate its members;

(f) the applicant has made necessary arrangements to establish connectivity with its trading members and clearing corporation;

(g) the applicant has adequate investor grievances redressal mechanism and arbitration mechanism to resolve disputes arising out of trades and its settlement;

(h) the applicant has the facility to disseminate information about trades, quantities and quotes in real time to at least two information vending networks which are accessible to investors;

(i) the applicant has adequate systems’ capacity supported by a business continuity plan
 
(j) the applicant has in its employment, sufficient number of persons having adequate professional and other relevant experience; and

(k) any other conditions as may be specified by the Authority.

3.Net Worth Requirements:

(1) A recognised market infrastructure institution shall have net worth of at least USD 3 million at all times.

(2) If required, as a risk management measure, the Authority may prescribe higher net worth for a recognised market infrastructure institution based on the nature and scale of business of the entity.
 
4. Shareholding Requirements:

(1) The shareholding in a recognised stock exchange shall be held by, –

(a) a stock exchange recognised in India or a Foreign Jurisdiction with a minimum of twenty-six percent. of the paid-up equity share capital of the recognised stock exchange; or

(b) a consortium of market infrastructure institutions recognised in India, an IFSC or a Foreign Jurisdiction with a minimum of fifty-one per cent. of the paidup equity share capital of the recognised stock exchange held by such consortium:

Provided that the stock exchange(s) recognised in India, an IFSC or a Foreign Jurisdiction shall have fifty-one per cent. or more shareholding within the consortium.

(2) Any other person in India, an IFSC or a Foreign Jurisdiction shall not at any time, directly or indirectly, either individually or together with persons acting in concert, acquire or hold more than twenty-five per cent. of the paid-up equity share capital in the recognised stock exchange.
 
5.Compliance Officer:

A recognised market infrastructure institution shall appoint a compliance officer who shall be responsible for monitoring the compliance of the applicable laws including securities laws, compliances with IFSCA Act and rules and regulations made thereunder and for redressal of investors’ grievances

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