Tag Archives: GIFT-IFSC

clearing membership

IFSCA has vide its circular dated 15th September, 2021 allowed IFSCA recognized non bank custodians who have set up entity through their branch in IFSC GIFT City to become a clearing member. Earlier they had allowed overseas entities to operate as a clearing member through their branch office. So this i guess is for the Indian non bank custodians to operate as a clearing member through their branch office. Some conditions are stipulated as under:

https://ifsca.gov.in/Viewer/Index/228

Non-Bank Entity recognised as a custodian by IFSCA

  1. Any non-bank entity recognised as a custodian of assets/securities by IFSCA through the branch structure, shall be permitted to become a Clearing Member of a Clearing Corporation in GIFT-IFSC. For this purpose, the entity shall comply with the following conditions:
    a) The entity can clear and settle trades only of its custodial clients
    b) The entity should be ring fenced financially, technologically, and operationally from its parent company and its functions, as a clearing member, shall be limited only to clearing and settlement services of its custodial clients.
    c) The entity shall ensure financial segregation by allocating funds to the tune of USD 1,500,000 (USD 1.5 mn) towards its clearing and settlement operations. The entity shall submit a declaration to the Authority in this regard.
    d) The entity shall participate in the Settlement Guarantee Fund contribution (SGF), as decided by the clearing corporation from time to time.
    e) The total exposure which the entity shall take on behalf of its registered clients shall be determined by its Board.
    Additional requirements
  2. All the other fees applicable to a clearing member in GIFT-IFSC shall be applicable to such an entity.
  3. The entity shall comply with all the necessary rules, bye-laws and guidelines prescribed by the clearing corporation with which it is registered as a clearing member and the Authority from time to time.
  4. The entity shall have adequate mechanisms for the purposes of reviewing, monitoring, and evaluating the controls, systems, procedures and safeguards.

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investing in securities under LRS

IFSCA has vide its circular dated 19th February, 2021 clarified that for resident individuals who want to open a current account in a banking unit situated in GIFT-IFSC, the minimum net worth criteria of USD1 million is not applicable. This is because the account is going to be opened for the purpose of routing the investment in securities under the Liberalised Remittance Scheme of the RBI. Only in such cases the minimum net worth criteria has been dispensed with.

Otherwise a qualified resident individual can open a current account with a banking unit at GIFT-IFSC if he has a minimum net worth of USD1 million. This is for the purpose of undertaking transactions which are either current account or capital account or a combination of both. These accounts are held in freely convertible currency.

Copy of the circular can be found here https://ifsca.gov.in/Viewer/Index/150

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