SEBI Proposes Removal of NOC Requirement for Stock Brokers in GIFT IFSC

The Securities and Exchange Board of India (SEBI) is set to significantly streamline the process for SEBI-registered stock brokers looking to establish a presence in the Gujarat International Finance Tec-City (GIFT-IFSC). A recently released consultation paper proposes the removal of the current No Objection Certificate (NOC) requirement, a move anticipated to enhance the ease of doing business and encourage greater participation in the burgeoning international financial services center.

Under the existing regulatory framework, SEBI-registered stock brokers are mandated to obtain an NOC from the market regulator before they can float a subsidiary or enter into a joint venture to operate within GIFT-IFSC. This requirement has been identified as a potential hurdle for swift market entry and expansion.

Key Proposed Changes

SEBI’s new proposal aims to abolish this NOC requirement entirely. Instead, stock brokers will be permitted to offer their services in GIFT-IFSC through a Separate Business Unit (SBU). This significant shift is designed to alleviate compliance burdens and enhance ease of doing business.

Implications of the Proposal

The proposed changes carry several key implications for stock brokers and the GIFT-IFSC ecosystem:

• Seamless Market Entry: Stock brokers will be able to leverage their existing infrastructure and operational expertise to establish a presence in GIFT-IFSC with greater ease and efficiency. This could lead to a quicker setup time and reduced administrative overhead.
• Independent SBU Operations: While operating under the umbrella of the parent stock broker, the SBU in GIFT-IFSC will function independently. Crucially, it will be required to maintain an “arms-length relationship” with the broker’s Indian operations, ensuring regulatory distinctiveness.
• Different Grievance Redressal Mechanisms: It’s important to note that grievance redressal mechanisms applicable to Indian operations, such as SEBI Complaints Redressal System (SCORES) and the Investor Protection Fund (IPF), will not extend to these SBUs. This is because the SBUs will fall under the regulatory jurisdiction of the International Financial Services Centres Authority (IFSCA) within GIFT-IFSC, which has its own set of investor protection frameworks.
• Transition for Existing Entities: The proposal also includes provisions for existing subsidiaries and joint ventures already operating in GIFT-IFSC to transition into the SBU model, offering them the benefits of the simplified framework.

SEBI has actively sought feedback on this crucial proposal, inviting public comments until April 11, 2025. Interested stakeholders can access the detailed consultation paper and submit their comments directly through the official SEBI website: https://www.sebi.gov.in/reports-and-statistics/reports/mar-2025/consultation-paper-on-facilitation-to-sebi-registered-stock-brokers-to-undertake-securities-market-related-activities-in-gujarat-international-finance-tech-city-international-financial-services-cent-_92823.html

This move by SEBI underscores its commitment to fostering a more conducive and accessible environment for financial services within GIFT-IFSC, aligning with India’s broader vision of establishing a world-class international financial hub.

Have doubts? Speak to us at dhairya.c@server5.the-treelife.com

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Dhairya Chaniyara

Senior Associate | Tax & Regulatory | dhairya.c@server5.the-treelife.com

Focuses on direct tax and regulatory services with a specialization in GIFT IFSC. Brings experience from various industries, including manufacturing, FMCG, IT-ITES, and healthcare, to deliver impactful tax solutions.