IFSCA’s Clarifications on Global Access for Broker Dealers

IFSCA has allowed allowed broker dealers registered with IFSCA to access stock exchanges outside the IFSC in two primary ways:

1. Cross-Border Arrangement: Broker dealers could engage with entities that provide access to international exchanges, provided these entities are regulated in their respective jurisdictions.
2. Direct Membership: Broker dealers could register as trading members on exchanges outside the IFSC, provided their trading activities are restricted to proprietary accounts without client dealings.

Additionally, broker dealers were required to seek a ‘no-objection certificate’ (NOC) from recognized stock exchanges in the IFSC before pursuing such global access.

Fee Structure Clarified

In the context of fees, the circular referenced an earlier communication from May 17, 2023. This established an annual fee of USD 1,000 for broker dealers and subsidiaries of exchanges providing global access. This fee structure is crucial for the IFSCA’s regulatory and administrative oversight.

Key Clarifications in the June 2024 Circular

The June 2024 circular addresses several critical points based on representations from broker dealers seeking clarity on the applicability of previous circulars and fee payments. Here are the main clarifications provided:

Applicability of the November 2021 Circular

The circular of November 25, 2021, is confirmed to apply to all broker dealers accessing global markets, whether through their cross-border arrangements or as members of international exchanges.

NOC Requirements

• Own Arrangements: Broker dealers accessing global markets through their own arrangements must seek NOC from recognized stock exchanges in the IFSC.
• India INX Global Access: Broker dealers utilizing the services of India INX Global Access IFSC Limited (India INX GA) are exempt from seeking such NOC.

Fee Payment Specifics

The annual fee stipulated in the May 2023 circular applies to:

• Broker dealers accessing global markets directly.
• India INX GA.

However, broker dealers using India INX GA do not have to pay this fee separately.

Timing and Pro Rata Payments

Broker dealers accessing global markets independently must make the initial fee payment on a pro rata basis from the date of NOC issuance. If multiple NOCs are required, payment is due within 15 days of receiving all necessary NOCs. For example, if a NOC is granted on July 10, 2024, the fee for that year would be USD 750 for the remaining nine months.

Pending Fees and Deadlines

Broker dealers with existing NOCs for global access must clear any pending fees for 2023-24 and 2024-25 by June 30, 2024. Late payments will incur additional fees as specified in Schedule-II of the IFSCA Fee Circular, with further regulatory actions possible under the IFSCA Act, 2019.

Implications for Broker Dealers

This circular streamlines the regulatory requirements and clarifies the fee structure, ensuring better compliance and smoother operations for broker dealers in the IFSC. The clear distinction between broker dealers using their arrangements versus those using India INX GA simplifies the process and removes ambiguities regarding NOC requirements and fee payments.