Distribution of Capital
Market Products and Services under IFSCA (Capital Market Intermediaries)
Regulations, 2021 in Gift City
The
International Financial Services Centres Authority (IFSCA), in furtherance of
its mandate to develop and regulate financial products, financial services and
financial institutions in the International Financial Services Centres (IFSC),
has notified the regulatory framework for Distribution of Capital Market
Products and Services under IFSCA (Capital Market Intermediaries) Regulations,
2021.
In recognition
of the crucial role played by distributors in distribution of capital market
products and services, a regulatory framework for distribution activities has
been specified. Further, as the unified regulator of a global financial centre,
IFSCA has enabled the registered distributors to undertake global distribution
from IFSC and offer their services to clients in various jurisdictions. In
order to protect the interest of clients, the framework provides for various
eligibility requirements, a detailed code of conduct including an advertisement
code, other obligations, various permissible activities, responsibilities of
issuers and service providers in IFSC, etc.
The salient
features of this framework are as under:
1.
Distributors may undertake distribution of:
2.
While distributors may offer their services to
“sophisticated investors” and distribute a wide bouquet of products and
services to them, the distribution to other investors may be undertaken with
higher level of diligence and from a restricted set of products and services.
3.
Distributors are permitted to enter into
arrangements with other distributors (called, Associated Distributors) from
India, IFSC and foreign jurisdictions to widen the scope of their operations,
get access to a larger pool of issuers and service providers, and cater to a
broader clientele.
4.
IFSCA registered / licensed entities, such as
Banking Units, Finance Companies, Broker-Dealers, Investment Bankers,
Investment Advisers and Corporate Agents – may avail of the simplified
registration process and undertake distribution services from IFSC.
5.
For investing in such jurisdictions which permit
omnibus structures, certain distributors, such as Banking Units, Finance
Companies, Broker-Dealers and those with a net worth more than USD 1,50,000,
are permitted to invest through such structure, subject to adequate measures,
such as prior consent of clients, maintenance of records, compliance with KYC
and AML/CFT norms, etc.
6.
A comprehensive code of conduct has been prescribed
to ensure distributors maintain high standards of integrity, disclosure,
diligence, promptitude and fairness in their dealings with clients. The code of
conduct shall be complied by all registered distributors, associated
distributors and other distributors that are empanelled by IFSC based entities
for distribution of their products / services.
The detailed
framework for Distribution of Capital Market Products and Services may be
accessed at https://ifsca.gov.in/Circular