IFSCA Tightens Substance Norms for CMIs in IFSC

The International Financial Services Centres Authority (IFSCA) has issued measures to ensure adequate “substance” in Capital Market Intermediaries (CMIs) operating in GIFT IFSC.

As part of its supervisory framework, IFSCA has been conducting multiple rounds of market intelligence visits to verify compliance with the IFSCA Capital Market Intermediaries Regulations, 2025.

1. Objective of Supervisory Visits

The visits were undertaken to assess whether CMIs maintain:

• A functional registered office presence
• Availability of Principal Officer and Compliance Officer
• Adequate infrastructure and operational setup
• Compliance with regulatory and governance requirements

2. Key Non-Compliance Observations

During these inspections, IFSCA identified several instances of non-compliance across certain CMIs:

2.1 Non-Operational Offices

• Some CMIs were found closed or unattended during business hours
• This raises concerns regarding actual operational presence in IFSC

2.2 Absence of Key Personnel

• In several cases, Principal Officers and Compliance Officers were not present
• No authorised personnel were available to respond to queries from the supervisory team

2.3 Lack of Regulatory Awareness

• Certain designated officers were found to have inadequate understanding of the applicable regulatory framework governing CMIs

2.4 Inadequate Infrastructure

• Some CMIs lacked the necessary infrastructure and systems required to carry out their business activities effectively

2.5 Use of Remote Access Tools

• Instances were observed where trading activities were conducted using remote access software such as:

1. 1. AnyDesk
   2. Ultraviewer

Such practices were found to be inconsistent with regulatory expectations in the IFSC jurisdiction.

3. Regulatory Implications

These findings indicate gaps in ensuring real operational presence and compliance among certain intermediaries. The observations highlight the need for CMIs to:

• Maintain physical and functional presence in IFSC
• Ensure availability of qualified and informed personnel
• Establish robust infrastructure and systems
• Adhere strictly to regulatory and operational norms

4. Objective of the Measures

The measures aim to:

• Strengthen regulatory oversight and compliance standards
• Ensure that CMIs maintain genuine substance and presence in IFSC
• Prevent misuse of IFSC framework through non-compliant or shell operations
• Enhance the credibility and integrity of the GIFT IFSC ecosystem

Overall, the initiative reinforces IFSCA’s commitment to maintaining a robust, transparent, and globally credible financial market environment.

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