SEBI Enables Stock Brokers to Set Up Separate Units for GIFT-IFSC
SEBI GIFT-IFSC operations have gained momentum with a key regulatory update. Through a circular dated 30 April 2025, SEBI has allowed registered stock brokers to establish a separate Business Unit (BU) to deal exclusively in the GIFT-IFSC securities market, under the regulatory framework of Section 11 of the SEBI Act, 1992.
This change is expected to enhance India’s global competitiveness in the financial sector by simplifying operational structures for domestic brokers.
What Does the SEBI Circular Say?
As per the SEBI circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2025/65, the regulator has made it clear that:
- Stock brokers can now set up a separate BU for GIFT-IFSC securities market operations.
- This unit will function independently from the existing domestic business operations.
Benefits for Stock Brokers
Here’s what this move brings to the table:
- Operational Clarity: Segregated accounts and functions reduce cross-jurisdictional confusion.
- Compliance Simplification: Easier to manage audits, reporting, and client onboarding.
- Business Expansion: Stock brokers can explore offshore opportunities via GIFT City without disturbing domestic compliance structures.
Compliance Snapshot: How to Register a BU for GIFT-IFSC
To begin GIFT-IFSC operations as a separate BU, brokers must follow:
- Obtain approval from SEBI and register under IFSCA norms.
- Maintain separate books of accounts for BU operations.
- Report independently to IFSCA, separate from SEBI-registered domestic operations.
- Ensure no co-mingling of funds between domestic and IFSC units.
Expert View: Why This Matters
“This is a strategic move for brokers looking to scale globally. It allows cleaner operations, easier foreign investor onboarding, and better regulatory alignment with IFSCA. It’s time Indian brokers took GIFT City seriously.”
Internal Comparison: Domestic vs GIFT-IFSC Unit
| Feature | Domestic Operation | GIFT-IFSC BU |
|---|---|---|
| Regulator | SEBI | IFSCA |
| Market Access | Indian Stock Exchanges | GIFT-IFSC exchanges (e.g., NSE IFSC, India INX) |
| Compliance Norms | SEBI LODR, SCRA | IFSCA Act, IFSC guidelines |
| Fund Segregation | Not applicable | Mandatory |
Frequently Asked Questions (FAQs)
Q1: Is separate registration with SEBI required for the BU?
A: No. The BU will be under IFSCA; SEBI approval is needed only for recognition of separate operation.
Q2: Can the same compliance officer handle both units?
A: It’s not advisable. Each BU must ensure dedicated compliance under respective regulations.
Q3: Will this affect tax treatment?
A: GIFT-IFSC units enjoy certain tax benefits; consult with Efiletax to structure your setup right.
Summary
SEBI now allows stock brokers to operate a separate Business Unit (BU) for GIFT-IFSC securities trading.
Conclusion: A New Gateway for Indian Brokers
This move by SEBI aligns with India’s ambition to make GIFT City a global financial powerhouse.