IFSCA Updates Eligibility for Remote Trading Participants on Stock Exchanges

On February 11, 2025, the International Financial Services Centres Authority (IFSCA) issued a circular revising the eligibility criteria for Remote Trading Participants (RTPs) on IFSC stock exchanges. This update follows feedback from overseas market participants and stock exchanges requesting modifications to increase participation. Under the revised guidelines, foreign entities regulated by their home jurisdiction’s securities market regulator are eligible to register as RTPs, provided their country is a signatory to the IOSCO-MMoU or has a bilateral MoU with IFSCA. Entities from countries flagged by the Financial Action Task Force (FATF) for anti-money laundering concerns are excluded. Additionally, unregulated entities can qualify if they are members of specific global stock exchanges. RTPs are permitted only proprietary trading in cash-settled derivatives and must partner with an IFSCA-registered clearing member. Indian-incorporated entities remain ineligible. Stock exchanges retain discretion over additional requirements, including net-worth criteria, security deposits, and fees. The circular supersedes the previous directive from April 3, 2024, and mandates stock exchanges to update their rules and report implementation progress in the Monthly Development Report to IFSCA.

International Financial Services Centres Authority

Circular No. IFSCA/CMD-MIIT/RTP/2024-25/001 Dated: February 11, 2025

The Stock Exchanges in the International Financial Services Centre (IFSC)

Dear Madam/Sir,

Subject: Remote Trading Participants on the Stock Exchanges

1. IFSCA, vide circular IFSCA/CMD-MIIT/RTP/2023-24/001 dated April 03, 2024, had permitted foreign entities not having a physical presence in IFSC, to trade directly on the Stock Exchanges in the IFSC, on a proprietary basis, as Remote Trading Participants (RTP), subject to terms and conditions.

2. It has been almost 10 months since IFSCA’s RTP initiative and traction in this sphere is beginning to build. However, IFSCA is in receipt of representations from market participants based overseas and Stock Exchanges, requesting for modifications in certain eligibility norms for the RTPs, which will increase traction. After taking into consideration the feedback and suggestions of the market participants and Stock Exchanges, it has been decided to modify the eligibility criteria of an RTP.

3. Accordingly, in partial modification of Para 2 of the IFSCA circular IFSCA/CMD-MIIT/RTP/2023-24/001 dated April 03, 2024, the revised conditions for onboarding a foreign entity as an RTP are as under:

i) An entity regulated by the securities market regulator in its home jurisdiction (country where it has been incorporated), shall be eligible to be onboarded as a RTP, subject to the following conditions:

a. The entity is a resident of a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding (IOSCO-MMoU) or a signatory to the bilateral Memorandum of Understanding (MoU) with IFSCA.

b. The entity is a body corporate;

c. The entity is not a resident of a country identified in the public statement of the Financial Action Task Force (FATF) as –

a jurisdiction having strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply;

or

a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the Financial Action Task Force to address deficiencies.

d. The entity shall be permitted to trade only on a proprietary basis and shall not be permitted to onboard clients.

e. The entity shall be permitted to transact only in cash-settled derivative products on the Stock Exchanges.

f. The entity shall be required to enter into an agreement with an IFSCA registered Clearing Member for clearing and settlement of its transactions executed on the Stock Exchanges.

ii) An entity not regulated by the securities market regulator in its home jurisdiction (country where it has been incorporated) shall be eligible to be onboarded as a RTP subject to the following:

(a) The entity is a member of any of the following Stock Exchanges, or such other Stock Exchanges, as may be specified by IFSCA from time to time:

(b) The entity shall be compliant with the conditions as mentioned at para 3 (i) (a) to 3 (i) (f) of this circular.

iii) An entity incorporated in India will not qualify to be onboarded by the Stock Exchanges as a RTP.

iv) The RTP shall be onboarded by the Stock Exchange in accordance with the IFSCA (Anti Money Laundering, Counter Terrorist-Financing and Know Your Customer) Guidelines, 2022.

v) The Stock Exchanges shall be responsible for specifying the terms and conditions for onboarding a RTP, inter alia including the risk management measures and code of conduct in relation to the RTP.

vi) The Stock Exchanges shall have the operational flexibility to specify the net- worth criteria, security deposit, application fee, annual fee and any other additional conditions for onboarding a RTP. The Stock Exchanges shall ensure that the RTP is in compliance with the conditions as mentioned in this circular.

vii) The recognized Stock Exchanges shall take necessary steps to implement this Circular including amending their bye-laws, rules and regulations.

viii) The Stock Exchanges shall inform the status of implementation of this Circular to IFSCA, in the Monthly Development Report (MDR).

The IFSCA circular IFSCA/CMD-MIIT/RTP/2023-24/001 dated April 03, 2024 is superseded by this circular.

This Circular is issued in exercise of powers conferred by Section 12 and 13 of the International Financial Services Centres Authority Act, 2019 to develop and regulate the financial products, financial services and financial institutions in the International Financial Services Centres.

A copy of this Circular is available on the website of the International Financial Services Centres Authority at www.ifsca.gov.in.

Yours faithfully

Praveen Kamat
General Manager
Division of Market Infrastructure Institutions and Technology
Capital Markets Department
e-mail: praveen.kamat@ifsca.gov.in
Tel: +91-079-61809820