The IFSCA (Capital Market Intermediaries) Regulations, 2025 (amended up to 12 January 2026 and circular dated 13 February 2026) establish a unified, principle-based and risk-sensitive regulatory framework governing capital market intermediaries operating in India’s International Financial Services Centres (IFSCs). The framework consolidates registration norms, introduces unified registration, strengthens governance standards, enhances ESG oversight, and aligns IFSC norms with global regulatory benchmarks.
Regulatory Architecture and Scope
The Regulations apply to 1) Broker Dealers, 2) Clearing Members, 3) Credit Rating Agencies, 4) Custodians, 5) Debenture Trustees, 6) Depository Participants, 7) Distributors, 8) ESG Ratings and Data Products Providers (ERDPPs), 9) Investment Advisers, 10) Investment Bankers, and 11) Research Entities. Registration is mandatory and applications are processed through the Single Window IT System (SWIT).
Unified Registration (2026 Amendment)
Entities undertaking multiple regulated activities may obtain unified registration. This streamlines compliance, reduces duplication, and enables integrated financial services operations while maintaining category-specific obligations. Applicants are required to pay separate fee for each activity to be undertaken.
Net Worth Requirements
Minimum net worth thresholds are for different activities are as under:
- Broker Dealer – As specified by the recognized stock exchange
- Clearing Member – As specified by the recognized clearing corporation
- Credit Rating Agency – USD 200,000
- Custodian – USD 1,000,000
- Debenture Trustee – USD 1,500,000
- Depository Participant – As specified by the depository
- Distributor – USD 50,000
- ESG Ratings & Data Products Provider – USD 25,000
- Investment Adviser – USD 25,000
- Investment Banker – USD 100,000
- Research Entity – USD 25,000
Multi-activity intermediaries must maintain the highest applicable threshold. Branch entities may maintain net worth at the parent level, earmarked for the IFSC branch. Revised compliance deadlines apply for certain categories including custodians.
Fit and Proper Criteria
Entities, principal officers, compliance officers, directors, key managerial personnel and controlling shareholders must meet integrity, financial soundness, and regulatory compliance standards. Disqualifications include convictions for economic offences, regulatory debarment, insolvency, willful defaulter status, and related grounds.
Governance and Human Resources
Each CMI must appoint Principal Officer (PO), Compliance Officer (CO), both must be based in IFSC, GIFT City. Expanded qualification recognition (including fintech and STEM disciplines) and revised experience thresholds reflect evolving financial market needs. Multi-activity entities may share certain officers subject to safeguards.
Core Compliance Obligations
Intermediaries must maintain 8-year electronic records, comply with AML/CFT norms, implement grievance redressal systems, maintain business continuity plans, ensure cyber resilience, and conduct annual compliance audits.
Category-Specific Obligations
The Intermediaries must comply with obligations as summarized under:
- Broker Dealers & Clearing Members : Must comply with exchange/clearing corporation bye-laws and rules.
- Credit Rating Agencies
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- Mandatory written agreements with clients.
- Continuous monitoring of ratings.
- Restrictions on withdrawal.
- Public disclosure of rationale.
- Prohibition on rating own/group securities.
- Rating committees mandatory.
- Prohibition on insider trading.
3. ESG Ratings and Data Products Providers (ERDPPs) : ERDPPs must comply on a “comply or explain” basis with principles relating to:
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- Governance
- Quality systems
- Conflict management
- Transparency
- Confidentiality
- Stakeholder engagement
- Mandatory website disclosures:
- Methodology
- Ratings issued
- Code of Conduct compliance
4. Investment Advisers
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- Strong fiduciary regime introduced:
- Must act in client’s best interest.
- No third-party commissions.
- Mandatory risk profiling.
- Suitability obligation.
- 15-day cooling-off for proprietary trades.
- Strict segregation between advisory and distribution.
- Implementation services allowed with disclosure and client consent.
5. Investment Bankers
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- Mandatory agreement with issuer.
- Clear demarcation of responsibilities for multiple lead bankers.
- Underwriting capped at 20x net worth.
- Insider trading prohibitions.
- Transaction disclosure obligations.
6. Debenture Trustees
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- Extensive fiduciary obligations:
- Trust deed vetting.
- Monitoring fund utilization.
- Security due diligence.
- Appointment of nominee director upon default.
- Enforcement of security.
- Ongoing reporting and inspections.
7. Depository Participants
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- Segregation of beneficial owner accounts.
- Daily reconciliation.
- Data integrity systems.
- Internal accounting controls.
8. Distributors,
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- Distribution model allows cross-border offering to: IFSC clients, Indian clients, Sophisticated investors, Foreign jurisdictions
- Products may originate from: India, IFSC, Notified foreign jurisdictions
9. Research Entities
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- Internal conflict management policies.
- Analyst trading restrictions.
- Remuneration independence.
- Chinese walls from investment banking.
- Monitoring of personal trades.
Supervisory and Enforcement Framework
IFSCA has broad powers including inspection, information requests, suspension, cancellation, and imposition of conditions. Registration is perpetual unless suspended or cancelled.
The Regulations position IFSC as a globally aligned, ESG-ready, digitally enabled capital market hub. They promote investor protection, cross-border capital flows, sustainable finance development, and operational flexibility for multi-functional intermediaries.
For any queries on the subject matter, please connect INDIA JURIS, GIFT City Office at giftcity@indiajuris.co.in
