The Securities and Exchange Board of India (SEBI) has issued Circular No. SEBI/HO/DDHS/DDHS-POD3/P/CIR/2024/103, effective immediately, authorizing ESG Rating Providers (ERPs) to conduct ESG rating activities under the International Financial Services Centres Authority (IFSCA) within the IFSC-GIFT City. IFSCA is now included in the list of regulators that ERPs must follow for ESG ratings. Consequently, IFSCA will handle any issues arising from ERPs’ activities in the IFSC, including complaints, enforcement actions, and interactions with third parties. This move aims to enhance the regulation and development of the securities market.
Securities and Exchange Board of India
Circular No. SEBI/HO/DDHS/DDHS-POD3/P/CIR/2024/103 Dated: July 19, 2024
To
All Registered ESG Rating Providers (ERPs),
Dear Sir/ Madam,
Sub: Enabling ESG Rating Providers (ERPs) to undertake ESG rating activities under IFSCA
1. In terms of Regulation 28E(d) of SEBI (Credit Rating Agencies) Regulations, 1999 (‘CRA Regulations’), Para 7.1 of the Master Circular for ERPs dated May 16, 2024 provides that ERPs may undertake or offer ESG rating of any product or issuer, as may be required by another financial sector regulator or authority, under the guidelines of such regulator or authority. To enable ERPs to undertake ESG rating activities in the International Financial Services Centre – Gujarat International Finance Tech-city (IFSC-GIFT City), International Financial Services Centres Authority (IFSCA) is hereby added to the list of financial sector regulators/ authorities as specified in Annexure 4 of the aforesaid Master Circular for ERPs.
2. In line with the above provision, it is specified that the ESG ratings undertaken by an ERP under the guidelines of IFSCA shall be under the purview of IFSCA. Accordingly:
2.1. Any issue arising from the activities of such SEBI registered ERPs in the IFSC shall be dealt with by IFSCA under the powers exercisable under Section 12 and 13 of IFSCA Act and regulations and subsidiary instructions made thereunder.
2.2. IFSCA shall be responsible for dealing with complaints, enforcement actions and furnishing information to third parties, including statutory or judicial bodies, in respect to the services provided by the ERPs in the IFSC.
3. The circular shall be applicable with immediate effect.
4. This circular is issued with the approval of competent authority, in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 28H of CRA Regulations to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.
Yours faithfully,
Sarika Kataria
Deputy General Manager
Department of Debt and Hybrid Securities
Tel No.022-2644-9411
Email ID – sarikak@sebi.gov.in
