The International Financial Services Centres Authority has released a consultation paper proposing the IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, inviting public comments. The draft framework aims to replace the applicability of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 within International Financial Services Centres (IFSCs). The proposed regulations seek to ensure fair, transparent, and efficient securities markets by prohibiting insider trading, market manipulation, fraudulent trading practices, and misuse of material non-public information. Drawing from global regulatory practices in jurisdictions such as the UK, Singapore, Hong Kong, and Dubai, the framework adopts a combination of rule-based and principle-based regulation to detect, deter, and penalize market abuse. Key provisions include restrictions on insider trading, disclosure requirements for insiders, prohibitions on manipulative trading, and institutional compliance mechanisms for listed entities. The authority has invited stakeholder feedback on the draft regulations by 27 March 2026.
INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY
CONSULTATION PAPER ON IFSCA (PROHIBITION OF MARKET ABUSE IN SECURITIES MARKETS) REGULATIONS, 2026
A. Objective
1. The objective of this consultation paper is to seek comments / views from public on the proposed International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026.
B. Background
2. As per section 13 of the IFSCA Act, IFSCA has been delegated the same powers of RBI, SEBI, IRDAI and PFRDA provided under 15 Acts (mentioned under Schedule I of the IFSCA Act) for the purpose of regulating the financial products, financial services or financial institutions in the International Financial Services Centres in India.
3. In terms of section 34 of the IFSCA Act,
All rules and regulations made or purporting to have been made or all notifications issued or purporting to have been issued under any Central Act relating to the financial products, financial services or financial institutions, as the case may be, shall, in so far as they relate to matters for which provision is made in this Act or the rules or regulations made or notification issued thereunder and are not inconsistent therewith, be deemed to have been made or issued under this Act as if this Act had been in force on the date on which such rules were made or notifications were issued and shall continue to be in force unless and until they are superseded by any rules or regulations made or notifications issued under this Act.
4. Accordingly, the regulations notified by SEBI for the purpose of regulating securities markets continued to apply in the IFSC, until they were superseded by regulations by IFSCA.
5. One of the core objectives of financial sector regulators is to ensure that the markets are fair, efficient and transparent that protects the interests of investors. To ensure confidence, trust and integrity in securities market, the regulator of the securities market needs to ensure fair market conduct which can be ensured by prohibiting, preventing, detecting and punishing such market conduct that leads to ‘market abuse’. It is therefore essential that the regulations should detect, deter and penalize market manipulation and other unfair trading practices. In accordance with section 34 of the IFSCA Act, 2019 the following regulations shall continue to apply in IFSC unless and until they are superseded by new regulations:
i) SEBI (Prohibition of Insider Trading) Regulations, 2015
ii) SEBI (Prohibition of Fraudulent and Unfair Trade Practice relating to Securities Market) Regulations, 2003
6. The objective of the proposed regulations is to replace the applicability of the aforesaid SEBI regulations with new regulations for prohibiting market abuse namely, the IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026.
C. Global Best Practices
7. The draft regulations on prohibition of market abuse in securities market have been prepared taking into consideration the10SCO Principles(Principles relating to Enforcement), the 10SCO report titled ‘Credible Deterrence in the Enforcement of Securities Regulation” and the global best practices in various jurisdictions such as Singapore, Hong Kong, UK and the European Union.
IOSCO Principles
8. The relevant 10SCO Principles relating to Enforcement are as follows:
i. Principle 10 – The Regulator should have comprehensive inspection, investigation and surveillance powers;
ii. Principle 11 – The Regulator should have comprehensive enforcement powers; and
iii. Principle 12 – The regulatory system should ensure an effective and credible use of inspection, investigation, surveillance and enforcement powers and implementation of an effective compliance program.
9. Principle 12 requires the regulator to demonstrate how the regulatory system in place, and its own organization, provides for an effective and credible use of inspection, investigation, surveillance and enforcement powers and compliance programs. In particular, the regulator should be able to demonstrate that there is a system to take effective inspection, investigation, surveillance and enforcement actions and that, where appropriate, actions have been undertaken to address misconduct or abuses. An effective program, for example, could combine various means to identify, detect, deter and sanction such misconduct. A wide range of possible sanctions could meet the standards according to the nature of the legal system assessed. The regulator, however, should be able to provide documentation that demonstrates that sanctions available (whatever their nature) are effective, proportionate and dissuasive.
10. The 10SCO Report titled ‘Credible Deterrence in the Enforcement of Securities Regulation’ highlights useful enforcement practices and powers adopted by various regulatory authorities around the world to promote and encourage credible deterrence as follows:
i. Factor 1: Legal certainty: Certain and predictable consequences for misconduct
ii. Factor 2: Detecting misconduct: By having access to good information
iii. Factor 3: Co-operation and collaboration to eliminate wrongdoer safe havens
iv. Factor 4: Investigation and prosecution of misconduct: Bold and resolute enforcement
v. Factor 5: Sanctions: Strong punishments – no profit from misconduct
vi. Factor 6: Public messaging: Promoting public understanding and transparency
vii. Factor 7: Regulatory governance: Good governance delivering better enforcement
United Kingdom
11. The Financial Conduct Authority (FCA), UK has notified the Market Abuse Regulation (MAR) which inter alia covers the following aspects:
a) Definition of ‘Inside Information’
b) Insider Dealing and Unlawful Disclosure
c) Market Soundings
d) Market Manipulation
e) Exemptions — Buyback programmes and stabilisation measures; Accepted market practices
f) Disclosures:
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- Disclosure and delaying disclosure of inside information
- Insider lists
- Suspicious transaction and order reports
- Managers’ transactions
- Investment Recommendations
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For more details, please refer to website of FCA at Market Abuse Regulation I FCA
Singapore
12. The Securities and Futures Act, 2001 (“SFA”) governs the regulation of activities and institutions in the securities and derivatives industry. Part 12 of the SFAAct specifies requirements relating to Market Conduct covering the following aspects:
a. Prohibited Conduct — Capital Market Products
i. False trading and market rigging transactions
ii. Market manipulation in relation to securities and securities-based derivatives contracts
iii. False or misleading statements, etc.
iv. Fraudulently inducing persons to deal in capital markets products
v. Employment of manipulative and deceptive devices
vi. Bucketing
v. Manipulation of price of derivatives contracts and cornering
vi. Dissemination of information about illegal transactions
vii. Continuous Disclosures
b. Prohibited Conduct — Financial Benchmarks
c. Insider Trading
i. Information generally available
ii. Material effect on price or value of securities, securities-based derivatives contracts or CIS units
iii. Trading and procuring trading in securities, securities-based derivatives contracts or CIS units
iv. Prohibited conduct by connected person in possession of inside information
v. Prohibited conduct by other persons in possession of inside information
vi. Not necessary to prove intention to use
vii. Exceptions
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- Redemption of units in collective investment scheme
- Underwriters
- Purchase pursuant to legal requirement
- Information communicated pursuant to legal requirement
- Attribution of knowledge within corporations
- Attribution of knowledge within partnerships and limited liability partnerships
- Knowledge of individual’s own intentions or activities
- Corporations and its officers, etc.
- Unsolicited transactions by holder of capital markets services licence and representatives.
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For more details, please refer to the website of Singapore Statutes Online.
Hong Kong
13. The Securities and Futures Ordinance (“SFO”) governs the regulation of securities and futures market in Hong Kong. The regulatory provisions relating to market abuse have been specified under Part XIII – Market Misconduct Tribunal (civil proceedings) and Part XIV – Offences Relating to Dealings in Securities and Futures Contracts, etc. (criminal proceedings).
14. Part XIII of the SFO covers the following types of mis-conduct:
a) insider dealing;
b) false trading;
c) price rigging;
d) disclosure of information about prohibited transactions;
e) disclosure of false or misleading information inducing transactions;
f) stock market manipulation,
and includes attempting to engage in, or assisting, counselling or procuring another person to engage in, any of the conduct referred to in paragraphs (a) to (f) above.
For more details, please refer to Securities and Futures Ordinance.
DIFC, Dubai
15. The regulatory framework for Prevention of Market Abuse has been specified under Part 6 of Markets Law by the Dubai Financial Services Authority (DFSA).
The regulatory framework specified by DFSA covers the following areas:
a) Fraud and market manipulation
b) False or misleading statements
c) Use of fictitious devices and other forms of deception
d) False or Misleading conduct and distortion
e) Insider dealing
f) Providing inside information
g) Inducing persons to deal
h) Misuse of information
i) Defenses for market manipulation, insider dealing and providing inside information
j) Chinese wall arrangements
For more details, please refer to Markets Law by DFSA.
D. Prohibiting Market Abuse — Rule based vs. Principle based Regulation
16. Market Abuse is a concept that encompasses unlawful behaviour in the financial markets and generally consists of Insider Trading, Market Manipulation, Fraudulent Trading and Unfair Trade Practices.
17. SEBI had constituted a Committee on Fair Market Conduct under the chairmanship of Shri T. K. Viswanathan, Ex-Secretary General, Lok Sabha and Ex- Law Secretary. The Committee made several recommendations to SEBI for necessary amendments in SEBI’s PIT Regulations and SEBI’s PFUTP Regulations. The Viswanathan Committee also deliberated on the issue “Rule Based vs. Principle Based Regulations” in the context of specifying requirements for prohibition of market abuse. The deliberations on this particular issue included:
As innovation leads to new types of market practices, it exposes markets to new methods of fraud. Also, over time, system based controls can eliminate certain types of fraudulent practices. Hence, the question arises whether regulations need to be principle based so as to cover the broad contours of the fraudulent activity without prescribing specific details of activity that is prohibited. On the other hand, rule-based regulations are more precise, making it clear to market participants the specific conduct that is prohibited, and also reduce the burden on the regulatory system of trying to cover various acts under the principles. However, the rules become obsolete with time and may not adequately cover new practices resulting from use of technology or financial innovation which could lead to manipulative activity escaping regulatory attention.
The Viswanathan Committee recommended that —
After deliberations, the Committee noted that such a combination of rule-based and principle-based approach is appropriate for the present stage of market development as such an approach not only enunciates the broad principles for ensuring fair markets but also enables rules to be specified to prohibit an illustrative list of identifiable unfair and manipulative trade practices.
18. A combination of rule-based and principle-based approach has been considered while drafting the regulations for prohibiting market abuse in IFSC.
E. Standing Committee on Primary Markets
19. The Standing Committee on Primary Markets (“the Committee”) has deliberated over the regulations for prohibiting market abuse in the IFSC. The regulations have been drafted after considering the rules/regulations for prohibition of market abuse / market manipulation in various global markets.
F. Proposed IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026
20. The salient features of the proposed IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026 are as under:
I. Key Definitions
i. Connected Person
Any person who is or has during the six months prior to the concerned act been associated with a company, directly or indirectly, in any capacity including by reason of frequent communication with its officers or by being in any contractual, fiduciary or employment relationship or by being a director, officer or an employee or holds any position including a professional or business relationship whether temporary or permanent, that allows such person, directly or indirectly, access to material non-public information or is reasonably expected to allow such access.
ii. Material non-public information
Any information, pertaining to a listed entity or its securities, directly or indirectly, which is not generally available and which upon becoming generally available, is likely to materially impact the price of the securities. An inclusive list of information considered as material has also been listed in the definition.
iii. Insider
Any person who is:
a) a connected person; or
b) in possession of or having access to material non-public information;
II. Communication or procurement of material non-public information
No insider shall communicate, procure, provide, or allow access to any material non-public information, relating to a company or securities listed or proposed to be listed, to any person including other insiders except where such communication is in furtherance of legitimate purposes, performance of duties or discharge of legal obligations.
Ill. Trading while in possession of material non-public information
No insider shall trade in the securities of a company listed or proposed to be listed when in possession of material non-public information, except the following:
a) Off-market transfer between insiders in possession of same material non-public information
b) Transaction through block deal window mechanism between the persons in possession of material non-public information
c) Transaction has been carried out pursuant to statutory or regulatory obligation
d) transaction was undertaken pursuant to the exercise of stock options in respect of which the exercise price was pre-determined
e) In case of non-individual insiders,
i. the individuals taking the trading decisions were different from the individuals in possession of material non-public information; and
ii. appropriate and adequate arrangements were in place to ensure that these regulations are not violated.
f) trades were pursuant to an irrevocable trading plan disclosed to the stock exchange (s) 120 days in advance, setting out either value of trade or number of securities to be traded, upper price limit for a buy trade, lower price limit for a sell trade and such other conditions, if any, specified by the Authority.
IV. Disclosure by insiders trading in securities
Every insider shall disclose to the company the trading details within two trading days of the transaction, if the value of such transaction or series of transactions over any quarter, exceeds USD 25,000/-. The listed entity shall within two working days disclose such information to the stock exchange (s) where its securities are listed and also host on its website.
V. Prohibition of certain dealings in securities
No person shall directly or indirectly —
a) buy, sell or otherwise deal in securities in a fraudulent manner;
b) use or employ, in connection with issue, purchase or sale of any securities listed or proposed to be listed, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made there under;
c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed;
d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed in contravention of the provisions of the Act or the rules and the regulations made there under.
VI. Prohibition of Manipulative, Fraudulent and Unfair Trade Practices
(1) No person shall indulge in a manipulative, fraudulent or an unfair trade practice in securities.
(2) A person shall not, directly or indirectly, engage, aid, assist, counsel or participate in any act, practice or course of conduct relating to securities that the person knows or reasonably ought to know:
a) results in or contributes to, or may result in or contribute to, a misleading appearance of trading activity in, or an artificial price for, securities; or
b) perpetrates a fraud on any person.
(3) A person shall not, engage in conduct in relation to securities that is misleading or deceptive or is likely to mislead or deceive another person.
(4) A person shall not, induce another person to deal in securities:
a) by making or publishing a statement, promise or forecast if the person knows, or is reckless as to whether, the statement is misleading, false or deceptive;
b) by a concealment of material facts.
(5) A person shall not, make a statement that the person knows or reasonably ought to know, at the time and in light of the circumstances under which it is made:
a) is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading; and
b) significantly affects, or would reasonably be expected to have a significant effect on, the market price or value of securities.
(6) A person shall not make an offer of securities if there is:
a) a misleading or deceptive statement in:
i. the offer document;
ii. any application form that accompanies the offer; or
iii. any other document that relates to the offer, or the application form;
b) an omission from the offer document or application form or any other document as required by Law; or
VII. Deemed manipulative, fraudulent or unfair trade practice
Following are proposed to be inter-alia, treated as deemed manipulative, fraudulent or unfair trade practice:
a) Knowingly indulging in act creating false or misleading appearance
b) Dealing in securities to inflate, depress or cause fluctuations in the price of securities for wrongful gain or avoidance of loss
c) Inducing any person to deal in securities for artificial manipulation of the price
d) Any act amounting to manipulation of the price of securities
e) any act or omission amounting to manipulation of the price of securities including influencing or manipulating the reference price or benchmark price of securities
f) Knowingly publishing or causing to publish the information relating to securities which is not true or does not believe to be true
g) Entering into a transaction in securities without intention of performing it
h) Selling, dealing or pledging of stolen, counterfeit or fraudulently issued securities
i) Disseminating information or advice through any media, whether physical or digital, which the disseminator knows to be false or misleading
j) A market participant entering into transactions on behalf of a client without knowledge or instruction of client
k) Indulging in a circular transaction to artificially provide a false appearance of trading
I) Fraudulent inducement of any person by a market participant to deal in securities with the objective of enhancing his brokerage or commission or income
m) a person registered with the Authority predating or otherwise falsifying records including contract notes, client instructions, balance of securities statement or client account statements
n) any order in securities placed by a person, while directly or indirectly in possession of information that is not publicly available, regarding a substantial impending transaction in that securities or its derivative
o) knowingly planting false or misleading news which may induce sale or purchase of securities
p) Mis-selling of securities or services relating to securities.
q) cornering of securities to gain control with a view to establish artificial demand or price;
r) buying and selling securities at the same price in order to artificially increase trading activity and generate interest;
s) dissemination of a rumour or creation of misleading activity which could push the price of securities, upward or downward;
t) short sell securities in the hope of diving the price down;
u) submission of order and cancelling it, repeatedly with no intent to execute the order, only to alter the supply or demand to artificially establish demand and price and thus mislead the market;
v) Any diversion, misutilisation or siphoning of assets or earnings of a company listed or to be listed or of a fund registered with the Authority;
w) Manipulation of the books of accounts or financial statements which would directly or indirectly manipulate the price of securities;
x) illegal mobilization of funds by sponsoring or causing to be sponsored or carrying on or causing to be carried on any collective investment scheme by any person.
VIII. Defenses for Market Manipulation and Insider Trading
It is proposed that a person shall not be found to contravene the provisions of these regulations, in the scenarios, inter-alia including the following:
a) Reasonable inquiries and reasonable belief
b) Reasonable reliance on information given by another person
c) Conduct was in accordance with price stabilization requirements
d) The dealing was in accordance with underwriting requirements
e) The dealings occurred in its functions as a liquidator or receiver
f) Dealing is undertaken legitimately and solely in the context of that person’s public takeover bid
g) Sole purpose of the Reporting Entity acquiring its own shares was to satisfy a legitimate reduction of share capital or to redeem securities in accordance with the Rules.
h) Information was disclosed in accordance with any requirement of the law or a court order.
IX. Institutional mechanism and code of conduct for prevention of Insider Trading and Market Abuse
Entities listed on the recognised stock exchanges in IFSC and registered with the Authority is proposed to be required to put in place an adequate and effective system of internal controls and a code of conduct to ensure compliance with these regulations.
G. Public Comments
21. Comments and suggestions from public are invited on the draft IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026 as enclosed in Annexure-I.
22. Comments may be sent by email to Shri Shubham Goyal, Assistant General Manager at goval.shubhamOifsca.govin and Shri Hemant Verma, Manager at verma.hemant560ifsca.govin with a copy to Shri Arjun Prasad, General Manager at ariun.pdOifsca.gov.in with subject line “Comments on the draft IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026” latest by March 27, 2026.
23. The comments should be provided in the following format:
| Name and Designation | ||||
| Contact No. and Email Address | ||||
| Name of Organisation | ||||
| S. No. | Regulation No. | Text of the Regulation | Comments/Suggestions/ Suggested modifications | Detailed Rationale |
March 06, 2026
Gandhinagar
