Almost three weeks after finance minister, Arun Jaitley, announced that the regulations for setting up International Financial Services Centre (IFSC) in GIFT city in Gujarat will be out in March, the board of Securities and Exchange Board of India (Sebi) on Sunday approved the IFSC guidelines, 2015 that allows Indian as well as foreign stock exchanges, clearing corporations and depositories to set up subsidiaries to undertake their business in IFSC.
Under the IFSC guidelines that will regulate financial services relating to securities market in an International Financial Services Centre, Sebi relaxed the shareholding and net worth requirement norms for intermediaries setting up their subsidiaries.
Stating that the new IFSC Guidelines, 2015 would help create vibrant capital market activity in such centres, Sebi chairman UK Sinha said, “Stock exchanges and clearing corporations would be provided concessions for setting up ventures in the IFSC. All existing exchanges would be allowed to set up their subsidiaries in the IFSC under the relaxed regimes.”
While the stock exchanges have been permitted to set up clearing corporations in IFSC, both Sebi registered and recognised intermediaries of foreign jurisdiction have been allowed to operate as intermediaries in IFSC through a subsidiary or joint venture.
Gujarat International Finance Tec-City (GIFT) would be the country’s first IFSC and the BSE and NSE have already signed MoUs for setting up international exchanges. The move is expected to capture an estimated Rs 1,334 crore per day or Rs 2 lakh crore per year worth of trading in rupee derivatives that currently goes to locations outside India
Earlier in his budget announcements in February Jaitley had said, “GIFT in Gujarat was envisaged as International Finance Centre….. I am glad to announce that the first phase of GIFT will soon become a reality. Appropriate regulations will be issued in March.”
The guidelines also permit issuance of depository receipts and debt securities in IFSC by domestic as well as foreign companies and also provide for listing and trading of equity shares issued by companies incorporated outside India. Non Resident Indian, foreign investors, institutional investors, and Resident Indian eligible under FEMA may participate in IFSC.
Even mutual funds and Alternative Investment Funds set up in IFSC can invest in securities listed in IFSC, securities issued by companies incorporated in IFSC and securities issued by foreign issuers.
Strong disclosure rules, Muni bonds cleared’
New Delhi: Sebi board also strengthened the continuous disclosure norms. While all listed companies will now be required to disclose information related to all events to the stock exchanges within 24 hours, the board outcome will have to be disclosed within 30 minutes of the closure of board meeting.
Sebi board also approved regulations for issuance and listing of debt securities by Municipality. The regulations state that the issuer shall only issue revenue bonds and the issuer’s contribution for each project shall not be less than 20 per cent of the project cost. While credit rating has been made mandatory, the minimum tenure has been fixed at 3 years.
Sebi also said it is framing norms to help young entrepreneurs raise funds through crowdsourcing and listing of start-ups, while it plans to tap social media in a big way to help investors. ENS