Millennium Post

To form global financial hubs, Sebi dangles sops for capital

The game-changing norms are aimed at creating a vibrant IFSC within India on the lines of Dubai and Singapore, and also help check trading in Indian securities and rupee derivatives at offshore financial hubs. Easier norms would be in place for setting up stock exchanges, clearing corporations, financial intermediaries, asset management companies and related capital market infrastructure in the IFSC -- the first of which is to come up in Gujarat's GIFT City.

The guidelines, to be effective from April 1, provide for domestic as well as foreign entities, including stock exchanges, to set up their operations in IFSCs. In such centres, domestic and foreign entities can raise money in Indian as well as overseas currencies while such fund raising activities should be in compliance with relevant Indian regulations. To attract more players for setting up their ventures in the IFSC, Sebi said that to begin with stock exchanges there need to have only a minimum net worth Rs 25 crore. The same should be increased to Rs 100 crore within three years of setting up the operations.

Similar norms would also be applicable for depositories coming up in the IFSC. For establishing clearing corporations in these financial services centres, the initial minimum networth requirement would be Rs 50 crore, which has to be enhanced to Rs 300 crore in three years. Under the IFSC regime, any recognised domestic or foreign stock exchange can set up a subsidiary, in the financial services centre, provided they hold at least 51 per cent stake in the venture. Similar criteria would be applicable to clearing corporations and depositories desirous of operating in IFSC.

As per the guidelines, an alternative investment fund or mutual fund operating in IFSC can accept money from eligible investors only in foreign currency. "An asset management company of a mutual fund operating in IFSC shall have a net worth of not less than $2 million which shall be increased to $10 million within three years of commencement of business in IFSC," Sebi said. The requirements regarding raising of funds in foreign currency such as minimum investment amount, corpus of fund, disclosures, investment conditions and valuations, among others, would be specified later by the regulator. Gujarat International Finance Tec-City (GIFT City) would be the country's first IFSC.

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. Under the Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015, entities operating in these centres would be allowed to issue debt securities subject to certain conditions.

Such debt securities should be listed in one or more stock exchanges operating in the IFSC. "The minimum subscription amount in case of private placement per investor shall not be less than $100,000 or equivalent or such amount as may be specified by Board (Sebi) from time to time,"
Sebi said.
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