Govt accepts IFSCA recommendations
For the first time in India, a single regulator will be regulating both the bullion spot and derivative contracts that would be traded on an exchange at the Gujarat International Finance Tec-City’s International Financial Services Centre (GIFT-IFSC).
The Government, on the recommendation of International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020, (IFSCA), has notified the bullion spot delivery contract and bullion depository receipt (with bullion as underlying) as Financial Products and related services as Financial Services under the IFSCA Act, 2019, on 31 August 2020.
IFSCA has been tasked with the responsibility of operationalization of this bullion.
The Authority approved the draft bullion regulations in its meeting on 27 Oct 2020, which paves the way for setting up the entire ecosystem for bullion trading, namely, bullion exchange, depository, clearinghouse and vaults, said the Finance Ministry.
The salient aspects of the Bullion Exchange Regulations include:
Functions and general obligations of a bullion exchange and clearing corporation;
Ownership and governance structure of a bullion exchange and clearing corporation;
Rights and Obligations of Bullion Depositories, Participants and Beneficial Owners;
The grant of registration to a vault manager by the Authority
The role of bullion depositories;
Other operational aspects of the bullion exchange.
The Bullion Exchange Regulations envisage providing an integrated platform for all the market intermediaries including trading members and clearing members, bullion depositories, vault managers, etc. so as to facilitate transparency and traceability in the bullion market and standardisation of bullion contracts.
On 16 October 2020, the Government, also on the recommendation of IFSCA, had notified Global In-House Centres (GIC) as financial service to provide services relating to financial products and financial services.
Some of the salient features of the regulations approved by the Authority are as follows:
A GIC may conduct its business in any mode permitted by the Authority, including branch mode;
The applicant entity shall exclusively cater to its financial services group wherein the entities served must be located in a Financial Action Task Force (FATF) compliant jurisdiction;
A financial services group is defined as any entity which is regulated by a financial services regulator or any other competent body regulating financial services activities in its home jurisdiction and include its holding, subsidiary or associate companies, branch, or subsidiary of a holding company to which it is also a subsidiary;
The support services provided by the applicant entity to its financial services group should be for the purpose of carrying out a financial service in respect of a financial product;
A GIC set up within the IFSC shall be entitled to avail itself of all concessions including tax holiday applicable to IFSC units;
In recent years, GICs in India have been contributing to the development of a highly-skilled talent pool in the country. India is emerging as the world’s leading centre of digitization, with one of the largest pool of digital talents.
These GIC regulations issued by IFSCA has the potential to put GIFT-IFSC in the leagues of leading FinTech cities, generating significant employment opportunities. #bourse #exchange #bullion #banking #trade #investment /fiinews.com
