IFSCA approved two new regulations

Context

On October 27, the International Financial Services Centre Authorities (IFSCA) approved two new regulations during the board meeting. 

Highlights

• The two regulations approved by the International Financial Services Centre Authorities were

  • The International Financial Services Centre authorities Bullion exchange regulations, 2020.

  • The International financial services Centre authorities (Global inhouse centres) regulation, 2020.

• Both the regulations pave the way for the establishment of an entire ecosystem for bullion trading including the bullion exchange, depository, clearing house, and vaults in the Gift City of Gujarat.

• Gift City of Gujarat is India’s sole international financial services centre (IFSC).

• Bullion market is a market through which buyers and sellers trade gold and silver.

About the International Financial Services Centre authorities Bullion exchange regulations, 2020

• Government of India has notified the bullion depository receipt and bullion spot delivery contract as financial products on the recommendation of the International Financial Services Centre authorities. 

• They have been notified under the International Financial Services centre at authority act, 2019. 

• The IFSCA has been entrusted with the task to operate the new bullion exchange. This would be for the first time that a single authority would regulate both the derivative contract and the bullion spot. 

• The bullion regulation would integrate the following salient aspects in order to facilitate the transparency and traceability in the bullion market: 

  • Gender obligations and functions of bullion exchange and clearing corporation

  • Obligations and rights of Bullion depositary is beneficial to owners and participants. 

  • Governance and ownership structure of the bullion exchange. 

  • Grant of registration to a vault manager by the Authority.

  • Role of Bullion repositories.

  • Other operational aspects of the bullion exchange

• Bullion Regulation will incorporate all of the above platforms to promote transparency and traceability in the bullion market.

About International Financial Services Centres Authority (Global In-House Centres) Regulations, 2020

• The Government of India, on the recommendation of IFSCA had notified Global In-House Centre's (GICs) as financial service to provide services relating to financial products and financial services on October 16, 2020.

• The key aspects of the regulation include: 

  • Global inhouse centre can conduct its business in any mode as listed by the authority. 

  • Entities which are being serviced must be located in a financial action task force (FATF) complaint jurisdiction. 

  • Setting up of a global inhouse centre within the IFSC will be valid with concessions applicable to IFSC units.