The International Financial Services Centres Authority (IFSCA) has recently issued Circular No. IFSCA-AIF/47/2023, dated September 15, 2023. This circular addresses all Fund Management Entities (FMEs) operating within the International Financial Services Centres (IFSCs) and pertains to the authorization of schemes under the IFSCA (Fund Management) Regulations, 2022. In this article, we will provide a detailed analysis of the key points outlined in this circular and its implications for FMEs.
Scheme Authorization Requirement: The circular highlights a significant change in the operational procedures for FMEs in IFSCs. According to the circular, FMEs are now required to seek authorization from IFSCA for each scheme filed under Chapters III, IV, and V of the IFSCA (Fund Management) Regulations, 2022. This marks a shift in the regulatory framework and aims to provide greater clarity in the authorization process.
Legal Authority: The circular cites its authority from Sections 12 and 13 of the Financial Services Centres Authority Act, 2019, in conjunction with regulation 146 of the IFSCA (Fund Management) Regulations, 2022. This underscores the legal basis for this requirement, making it mandatory for FMEs to comply.
Operational Impact: FMEs operating in IFSCs need to acknowledge the operational impact of this change. Seeking authorization for each scheme adds an additional layer of regulatory oversight. It implies that FMEs will need to engage with IFSCA for approval before launching new schemes, potentially affecting their speed to market and flexibility.
Transparency: While this requirement may add complexity to the operational process, it also enhances transparency within the IFSC ecosystem. IFSCA’s involvement in authorizing schemes ensures that each scheme undergoes thorough scrutiny, potentially mitigating risks for investors.
Access to Circular: The circular emphasizes that a copy of this communication is available on the IFSCA website (ifsca.gov.in), making it easily accessible for all stakeholders. FMEs and other interested parties should refer to the official source for the complete details and any potential updates.
The recent circular issued by IFSCA, requiring Fund Management Entities (FMEs) in International Financial Services Centres (IFSCs) to seek authorization for schemes under the IFSCA (Fund Management) Regulations, 2022, signifies a significant regulatory change. FMEs must now navigate a more structured process for scheme authorization, impacting their operational procedures. This move, backed by legal authority, aims to enhance transparency and regulatory oversight within IFSCs. It is imperative for FMEs to stay updated with IFSCA’s directives and ensure compliance with this new requirement to operate effectively in the IFSC environment. For the latest information and the full circular, please refer to the IFSCA website.
International Financial Services Centres Authority
Circular No. No. IFSCA-AIF/47/2023-Capital Markets Dated: September 15, 2023
All Fund Management Entities (FMEs) in International Financial Services Centres (IFSCs)
Dear Sir/ Madam,
Subject: Authorisation of Scheme file under IFSCA (Fund Management) Regulations 2022.
1. Reference is drawn to the International Financial Services Centres Authority (Fund Management) Regulations, 2022 (“Regulations”).
2. In order to provide operational clarity, it has been decided that all FMEs shall henceforth seek authorisation from the Authority for each scheme filed under Chapters III, IV and V of the Regulations.
3. This circular is issued in the exercise of the powers conferred by Sections 12 and 13 of the Financial Services Centres Authority Act, 2019, read with regulation 146 of the IFSCA (Fund Management) Regulations, 2022,
4. A copy of this circular is available on the International Financial Services Centres Authority website at ifsca.gov.in.