The International Financial Services Centres Authority (IFSCA) has issued 60 warnings to capital market intermediaries (CMIs) operating in GIFT City this fiscal year for lapses including unattended offices during business hours, absence of key personnel, weak operational infrastructure and use of remote access software for trading.
The unified regulator, which has been conducting a series of market intelligence visits to assess operational “substance” among registered entities, found that several intermediaries were either non-functional during business hours or lacked key managerial personnel at their registered offices. In multiple instances, neither the Principal Officer nor the Compliance Officer was present, raising concerns over governance and accountability standards.
IFSCA also pointed out structural weaknesses, including inadequate infrastructure to support core business activities and instances where the same individual was handling both compliance and trading roles — highlighting potential conflicts of interest. The regulator further noted the use of remote access tools such as AnyDesk and UltraViewer for trading activities, practices that are inconsistent with the regulatory framework governing operations within the IFSC.
Action initiated
IFSCA officials told the businessline that in FY 26 (till date), warnings have been issued in 60 cases and 10 cases have been referred to enforcement. In 51 cases, IFSCA has also issued advisories. “In some CMIs, one common person was appointed both as Principal Officer and Compliance Officer. In a few cases, these instances were repeated despite the issuance of Warnings/Advisories by the Authority to the CMIs…. In some cases, IFSCA officials also observed that the compliance officer was also handling the trading desk, which is a conflict of interest,” IFSCA stated.
“In some CMIs, the designated Principal Officers and Compliance Officers lack adequate awareness of the regulatory framework applicable to Capital Market Intermediaries. Additionally, it was observed that in some cases, only back-office staff were present during inspections,” it added. There are over 175 capital market intermediaries functioning out of GIFT IFSC which includes broker dealers (92) and clearing members (24). There are also smaller number of credit rating agencies, custodians, debenture trustees, depositary participants, distributors of capital market products and services, Global Access Providers, Investment Advisors, Investment Bankers and Research Entities who fall in this category.
These findings by IFSCA point to breaches of key provisions under the IFSCA Capital Market Intermediaries Regulations, 2025, particularly those relating to the physical presence of key management personnel and maintenance of operational infrastructure. Despite prior warnings and advisories in some cases, certain entities were found to be repeat offenders.
Following the inspections, IFSCA has initiated regulatory action against the non-compliant intermediaries and issued a broader advisory to all market participants to ensure strict adherence to regulatory requirements.