The International Financial Services Centres Authority (IFSCA) has released a Consultation Paper on the Regulatory Framework for Dematerialisation of Securities by Entities in the IFSC jurisdiction. The initiative aims to ensure that securities issued by entities located in the GIFT City International Financial Services Centre (IFSC) are held and serviced within the IFSC’s regulatory ecosystem, thereby enhancing operational efficiency and regulatory clarity.
Objective of the Consultation Paper
The main objective of this consultation paper is to invite public comments and stakeholder feedback on a proposal mandating that all entities established in the IFSC jurisdiction dematerialise their securities with a depository registered under IFSCA, rather than domestic depositories in India. This step is intended to streamline regulatory oversight and align IFSC operations with global best practices.
Background and Need for Change
Currently, the India International Depository IFSC Ltd is designated as the issuing agency for International Securities Identification Numbers (ISINs) within GIFT City. However, it has been observed that several entities operating in IFSC continue to obtain ISINs from domestic depositories and maintain their securities there, despite being registered in the IFSC.
This dual arrangement can create inconsistencies in regulatory treatment, as securities issued by IFSC entities are categorized as foreign securities under the Foreign Exchange Management Act (FEMA), 1999. To address this regulatory overlap and promote a unified framework, IFSCA has proposed a clear mandate that all IFSC entities obtain ISINs and dematerialize their securities through an IFSCA-registered depository.
Key Provisions of the Draft Circular
The draft circular, attached as Annexure-1 to the consultation paper, outlines the following major provisions:
- Mandatory Dematerialisation in IFSC Depositories:
All entities incorporated in the IFSC must obtain ISINs and dematerialise their securities through an IFSCA-registered depository. - Clarification on International Listings:
While ISINs must be obtained from an IFSC depository, issuers may continue to use International Central Securities Depositories (ICSDs) for issuance and listing of securities, as per the IFSCA (Listing) Regulations, 2024. - Transition Timeline:
Entities that have already dematerialised their securities with domestic depositories will be required to migrate to an IFSC depository by March 31, 2026. - Depository Responsibilities:
IFSC depositories will ensure a seamless migration process, minimize disruption, and provide detailed procedural guidance to issuers and investors. - Compliance and Reporting:
IFSC depositories must submit a compliance report to IFSCA by April 30, 2026, confirming the successful completion of migration.
Call for Public Comments
The IFSCA has invited comments and suggestions on the draft circular from all stakeholders — including financial institutions, issuers, market participants, and investors — by November 16, 2025. Feedback should be sent to:
- Mr. Saurabh Kumar, Manager (saurabh.kumar1@ifsca.gov.in)
- Mr. Pawan Kumar Chowdhary, DGM (pawan.kc@ifsca.gov.in)
- Mr. Arjun Prasad, GM (arjun.pd@ifsca.gov.in)
Comments are to be submitted in the prescribed format, specifying the paragraph number, suggestion, and rationale for each recommendation.
Conclusion
This consultation marks an important step in enhancing the regulatory coherence, transparency, and operational efficiency of capital markets in the IFSC. By requiring all securities to be dematerialised within the IFSC’s own depository framework, the IFSCA aims to build a more integrated, globally competitive, and investor-friendly financial ecosystem in GIFT City.