The International Financial Services Centres Authority (“IFSCA”) has emerged as a dynamic regulator in India’s financial landscape. It is tasked with crafting a cohesive and globally competitive regulatory regime for financial services within the GIFT IFSC. In line with this mandate, the IFSCA (Capital Market Intermediaries) Regulations, 2025 (“New CMI Regulations”) mark a significant shift from the former 2021 CMI Regulations. This short analysis undertakes a comparative approach of the two frameworks thereby tracing the regulatory shift in terms of approach, scope and major changes. The New CMI Regulations, 2025 provide the revised regulatory framework for registration, regulation and supervision of capital market intermediaries set up in the IFSC, based on experience gained, stakeholder consultation and benchmarking with global standards.
The key changes include the following:
Category of intermediaries
(i) The New CMI Regulations provide the regulatory framework for ‘Research Entity’ as a new category of intermediary, while the ‘Account Aggregator’ category has been removed. (R.36)
(ii) The regulatory framework for ‘Distributors’ and ‘ESG Ratings and Data Products Providers’ (ERDPP), which are currently outlined through circulars, has been incorporated in the New CMI Regulations. (R.33)
(iii) A Credit Rating Agency will be permitted to undertake activities relating to ERDPP only after obtaining a separate registration as ERDPP with the Authority under the New CMI Regulations.
2. Principal Officer and Compliance Officer
(i) The New CMI Regulations specify the minimum qualification & experience requirements for Principal Officer & Compliance Officer applicable for all categories of capital market intermediaries. Further, where an entity has multiple registrations under the New CMI Regulations, the principal officer shall be appointed/ designated for each such activity separately. (R.9)
(ii) However, the entity may have common Principal Officer for multiple activities at this stage, which may be reviewed later depending upon the size, scale and complexity of the business, in respect of the following: a) An entity registered as broker dealer, clearing member and depository participant and; b) an entity registered as CRA and ERDPP.
(iii) Further, where an entity has multiple registrations under these regulations, the entity may have the same person as compliance officer at this stage, which may be reviewed later depending upon the size, scale and complexity of the business.
3. Global Access
(i) A CMI, including a broker dealer, desirous of dealing in securities in Foreign Jurisdictions shall comply with the norms and requirements specified by the Authority. (R.27)
4. Net Worth Requirements (R.7 r/w Schedule I)
The net worth requirements have been revised in the New CMI Regulations, including the following:
(i) In case of entities operating in branch, the minimum net worth requirements maintained at the parent level in the home jurisdiction shall be earmarked for its branch in IFSC.
(ii) In respect of broker dealers, clearing members and investment bankers, net worth maintained in the form of “liquid assets” shall only be considered.
(iii) The minimum net worth requirements have been rationalized for the following categories:
a. Credit Rating Agency – USD 200,000/-
b. Investment Adviser – USD 25,000/-
c. Investment Banker – USD 100,000/-
(iv) The minimum net worth requirements under these regulations shall be separate and in addition to the minimum net worth requirements applicable for other activities outside IFSC or within IFSC under any other regulations or framework.
5. Submission of Annual Compliance Audit
The New CMI Regulations specify that all the intermediaries shall file a copy of their annual compliance audit with IFSCA by the 30th of September every year.
As the capital market ecosystem in IFSC has made substantial progress in last 3-4 years in the IFSC. The New CMI Regulations will facilitate intermediation of financial services in a more regulated manner consistent with the three core objectives of securities regulation by IOSCO i.e.
(a) Protecting the interests of investors;
(b) Ensuring that markets are fair, efficient and transparent; and
(c) Reduction of systemic risk, to the extent applicable on the intermediaries in the IFSC.
The New Regulations are aimed at enhancing the substance requirements in the IFSC by specifying detailed norms and requirements for appointment of Principal Officer and Compliance Officer by the capital market intermediaries in the IFSC. The New CMI Regulations also aim to promote ease of doing business for the entities participating in the capital markets by simplifying and rationalizing requirements based on feedback and suggestions received from the stakeholders.
COMPARATIVE ANALYSIS
| Provision | IFSCA (CMI) REGULATIONS, 2021 | IFSCA (CMI) REGULATIONS, 2025 |
| Obligation to Register | Reg. 3 – Intermediaries like brokers, advisers, etc. to register. | Reg. 4 – Unified and clearer list of 11 intermediaries. New exemption categories introduced. |
| Application for Registration | Reg. 4 – Physical form (Part I of Sch. I), routed via MIIs, allows combined registration. | Reg. 5 – Must apply via SWIT, clearly defines rejection of incomplete applications. |
| Legal Form of Applicant | Reg. 5 – Allowed co., LLP, body corporate, partnership, proprietorship, branch (with conditions). | Reg. 6 – Narrowed scope – Only company, LLP, body corporate, or branch permitted. |
| Net Worth Requirements | Reg. 6 – Maintain highest applicable net worth. No date for compliance. | Reg. 7 – Compliance deadline (1st October, 2025), branch capital ring-fencing. |
| Fit & Proper Person | Reg. 7 – Lists conditions and disqualifications | Reg. 8 – Expanded disqualifications, Authority’s discretion on materiality. |
| Principal & Compliance Officer | Reg. 23 (minimal detail) | Reg. 9 – Include dedicated section with qualifications, experience, deadline. |
| Furnishing Information During Application | No Express Provision | Reg. 10 – Express provisions for clarification, inspection, hearing. |
| Validity of Registration | Reg. 11 – “As specified” by Authority. | Reg. 13 – Perpetual unless suspended or cancelled. (Clarification) |
| Surrender of Registration | Reg. 12 – Through MIIs where applicable | Reg. 14 – Same, adds surrender effective only after IFSCA acceptance. |
| Code of Conduct | Reg. 13 – Must follow Code as in Schedule III. | Reg. 15 – Must follow Code as in Schedule II. |
| Books, Records, and Documents | Reg. 14 – Maintain for 10 years, list provided. | Reg. 16 – Maintain for 8 years, adds AML & KYC guidelines (2022), records of complaint handling. Reduced duration but broader scope of documentation. |
| Information to Authority | Reg. 15 – Material changes to be reported. | Reg. 17 – Adds intimation timelines (e.g., 15 days for KMP change). |
| Grievance Redressal | Reg. 16 – Steps to be taken within 1 month. | Reg. 18 – No timeline, refers to IFSCA requirements. |
| Dispute Resolution | Not explicitly stated. | Reg. 19 – Must follow IFSCA-specified dispute resolution mechanism. |
| Annual Audit | Reg. 22 – Annual + additional audits. | Reg. 25 – Adds audit submission deadline as 30th September, filing with MIIs. |
| Compliance Officer Appointment | Reg. 23 – Dedicated section for appointment of compliance officer. | Now included under Reg. 9 itself with principal officer & other human resources. |
| Broker Dealers & Clearing Members | Reg. 24 – Listed eligible clients, required compliance with laws. | Reg. 26 – Client list removed. General compliance obligations retained. |
| Global Access | No Express Provision. | Reg. 27 – Global access for broker dealers subject to IFSCA norms. New inclusion pertaining to cross-border market access for CMIs. |
| Application Format | Schedule I – Part I and II provided for standard and simplified application. | Omitted.
(Digital – SWIT System as replacement) |
| Net Worth Requirements | Schedule II – Provided detailed net worth requirements per intermediary type. | Schedule I – Revised requirements with updated values.
(i) Inclusion of Research Entity (ii) Removal of Account Aggregator. |
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