IFSCA clarification regarding Remote Trading Participants on Stock Exchanges in the IFSC

International Financial Services Centres Authority has issued a circular governing Remote Trading Participants on Stock Exchanges in the IFSC. Here’s a breakdown of what this circular entails:

Introduction of RTPs

Foreign entities, devoid of a physical presence in IFSC, are now permitted to engage in direct proprietary trading on Stock Exchanges, sans the necessity of a Broker-Dealer intermediary.

Criteria for Onboarding RTPs

  1. Eligible entities must hail from countries whose securities market regulators are signatories to the IOSCO-MMoU or have bilateral MoUs with IFSCA.
  2. They must be existing members of specified Stock Exchanges for a minimum of one year.
  3. Entities must be corporate bodies and not residents of countries flagged by FATF for AML/CFT deficiencies.
  4. RTPs are limited to proprietary trading and are barred from onboarding clients. Trading activities are confined to cash-settled derivative products.
  5. RTPs must collaborate with an IFSCA-registered Clearing Member for transaction clearing and settlement.
  6. Indian incorporated entities are ineligible for RTP onboarding.

Compliance Requirements

RTP onboarding must adhere to IFSCA’s AML/CFT and KYC guidelines of 2022.

Terms and Conditions

Recognized Stock Exchanges within IFSC are tasked with outlining specific onboarding terms, including risk management measures and a code of conduct for RTPs.

Operational Flexibility

Stock Exchanges possess the autonomy to stipulate net-worth criteria, security deposits, application and annual fees, and additional conditions for RTP onboarding, ensuring compliance with prescribed regulations.

Implementation

Stock Exchanges are mandated to enact necessary amendments to their bye-laws, rules, and regulations to accommodate RTPs.

Reporting

Stock Exchanges must furnish IFSCA with monthly updates on the implementation status of this circular.

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