Summary: As the ancient adage goes, ‘a journey of a thousand miles begins with a single step’ — and India’s bold stride into international finance begins at IFSC, GIFT City. This blog examines the regulatory framework governing Global Access Providers (GAPs) at IFSC, GIFT City, analysing SEBI’s circular of May 2025, which permits registered broker-dealers to operate within IFSC through a separate business unit and IFSCA’s revised GAP framework of August 2025. It covers the definitions of GAPs and Introducing Brokers, permissible clientele, operational models and permissible products, including FEMA and LRS constraints for resident Indian investors, as India’s capital markets open firmly to the world.
Rome was not built in a day – and neither can a world-class financial centre be. Yet, with the establishment of India’s first International Financial Services Centre (“IFSC”), nestled within the architecturally resplendent Gujarat International Finance Tec-City (“GIFT City”) within a notified Special Economic Zone, it represents not merely a geographical designation but a philosophical declaration that India will no longer remain a spectator in the theatre of international finance. The goal is to establish a business-friendly regulatory regime at par with other comparable IFCs, under the aegis of the IFSC Authority (“IFSCA”), a unified regulator for the IFSC, which has been instrumental in shaping its progressive regulatory ecosystem.
In a welcome move toward regulatory simplification, the Securities and Exchange Board of India (“SEBI”), vide its circular dated May 02, 2025[1], authorised its registered broker-dealers to undertake securities market-related activities within the IFSC, GIFT City, through a duly constituted separate business unit – structured as either a subsidiary or a branch. By dispensing with the erstwhile no-objection approval and separate entity requirement, the circular markedly streamlined market entry.
Fortifying this momentum, the IFSCA unveiled its revised and comprehensive Regulatory Framework for Global Access in the IFSC (“IFSCA Circular”)[2], dated August 12, 2025, superseding its earlier circulars ‘Global Access to Broker Dealers’, dated November 25, 2021[3], and ‘Global Access Clarification’, dated June 06, 2024[4]. This recalibrated architecture for Global Access Providers (“GAP”) is harmoniously dovetailed with the IFSCA (Capital Market Intermediaries) Regulations, 2025, furnishing broker-dealers a cohesive pathway to bridge Indian and international investors with global markets.
Together, these regulatory strides paint a compelling picture of the IFSCA’s unwavering commitment to transparency, operational efficiency and investor confidence. By enabling regulated access to securities and permissible financial instruments across international exchanges, the framework positions IFSC, GIFT City, not merely as a domestic initiative, but as a strategic launchpad for global capital flows – a bridge between India’s financial ambitions and the boundless possibilities of international markets.
Structural anatomy: Key definitions underpinning the framework
The IFSCA Circular delineates a GAP as: (a) a subsidiary established within the IFSC by a recognised stock exchange to facilitate connectivity to global markets; or (b) an IFSCA registered broker-dealer interfacing with international markets through direct contractual arrangements with foreign brokers. Registration as GAP is channelled through the IFSCA’s Single Window IT System (SWIT) Portal.
It further delineates the ‘Introducing Broker’ – a broker-dealer domiciled within the IFSC that neither maintains direct nexus with any foreign broker nor independently executes cross-border transactions, much like a harbourmaster who guides vessels but does not sail them. Functioning as a gateway, the Introducing Broker channels clients exclusively to authorised GAPs, remaining insulated from the operational complexities of cross-border execution while providing its clients seamless access to global markets.
Opening the gates: Permissible clientele
The Circular delineates permissible clientele into two categories: (i) persons resident in India, who may access global markets to the extent sanctioned under the Foreign Exchange Management Act, 1999 (“FEMA”), and regulations thereunder – notably, resident Indian individuals are confined to products permissible under the Master Direction on Liberalised Remittance Scheme (“LRS Master Direction”)[5]; and (ii) persons resident outside India, subject to FEMA provisions. In essence, the framework is designed to be inclusive, allowing a diverse range of investors into the IFSC, GIFT City ecosystem, yet it maintains strict oversight to uphold India’s foreign exchange control regime.
Navigating the channels: Operational models for global access
The Circular charts multiple operational pathways for clients to access global markets. These are:
Directly through GAP
Clients may be onboarded directly by GAP, establishing an unmediated relationship or without any middleman. This streamlined route makes GAP solely responsible for ensuring regulatory compliance, including know-your-customer (“KYC”) obligations under the IFSCA (Anti-Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022[6], and all other obligations prescribed under the Circular. The model is not merely operationally seamless, it reflects a clear allocation of responsibility that enhances regulatory certainty and investor confidence.
Referral arrangements
Where it takes two to tango, the Circular also contemplates clients being channelled to a GAP through an Introducing Broker or a referral arrangement with an entity domiciled in India, IFSC or any foreign jurisdiction. The contractual framework assumes one of two configurations: (i) a tripartite agreement binding the GAP, the Introducing Broker and end-clients; or (ii) a bilateral agreement between the GAP and Referral Partners, articulating all material terms governing such arrangements. These agreements must delineate with precision the respective KYC responsibilities and transparently disclose any fees or remuneration tethered to the referral – ensuring no hidden costs for clients.
In either model, where investments are executed through a foreign broker, transactions may be routed through an omnibus account at the foreign broker’s level. Concurrently, the broker operating within the IFSC, GIFT City must maintain segregated nominee accounts corresponding to end-client sub-account(s) – ensuring appropriate segregation and ring fencing. This dual-layer architecture strikes a deliberate balance between operational efficiency in cross-border execution and robust investor protection.
The investment compass: Permissible products through GAP
The Circular maps out permissible products accessible through GAP, based on the IFSC regulatory framework and applicable foreign exchange control regime.
A GAP may facilitate access to financial products listed on foreign stock exchanges through a foreign currency account held in the IFSC, provided such products qualify as ‘financial products’[7] under the IFSC framework. The Circular expressly excludes crypto-assets and instruments based on crypto, reflecting a deliberate posture to insulate the IFSC from the volatility of unregulated digital assets while the central government firms its position on virtual digital assets.
For persons resident in India, a GAP must ensure access is restricted to products permissible under the LRS Master Direction. Permissible capital account transactions include overseas portfolio investment (“OPI”) – encompassing shares of listed overseas companies, debt instruments, units of mutual funds and alternative investment funds – in accordance with the Foreign Exchange Management (Overseas Investment) Rules, Regulations and Directions, 2022. Accordingly, restrictions under FEMA will need to be adhered to as well. For instance, the LRS Master Direction prohibits remittances for margins or margin calls to overseas exchanges, circumscribing derivative participation for resident Indian investors. Similarly, OPI is not permitted in any derivatives, unless otherwise permitted by the RBI.
The Circular further introduces a product-level exclusion to protect the domestic IFSC exchange ecosystem. GAP is prohibited from providing access to index derivatives, single stock derivatives, bond derivatives, or USD-INR/ INR-USD derivatives already available on recognised stock exchanges in the IFSC – a measure ensuring the home turf is not cannibalised.
The Circular accords an expanded mandate to a GAP constituted as a subsidiary of a recognised stock exchange in the IFSC. Such entities may enter into agreements with brokers, platforms, distributors, investment advisors and asset management companies in foreign jurisdictions, providing access to ‘capital market products and services’[8], including mutual funds, alternative investment funds, and products, that may or may not be exchange-traded. This broader canvas widens the investment palette available within the IFSC ecosystem.
Charting the path forward
The proof of the pudding is in the eating – and the IFSCA’s GAP framework represents a significant stride in India’s capital market regulatory architecture. By establishing a comprehensive structure for global market access, the framework positions IFSC, GIFT City as India’s premier gateway to international financial markets.
For capital market intermediaries, the GAP framework presents a compelling opportunity to build a globally integrated securities business from Indian soil. The framework enables entities to adopt dual operational structures – leveraging IFSC, GIFT City for international market access while utilising domestically licenced entities for onshore operations. In short, the best of both worlds.
Several leading Indian banks and financial institutions have already planted their flag in IFSC, GIFT City, making it a strategic gateway to the Indian market. This opens avenues for cross-border partnerships, enabling GAPs to serve diverse investment needs across geographies with enhanced efficiency.
From an investor protection standpoint, this framework is a far cry from unregulated digital applications that currently provide resident Indians with access to offshore securities. By channelling global market access through IFSCA-regulated intermediaries, the framework affords investors the safeguards of a robust compliance ecosystem – encompassing KYC, AML and CFT protocols – while giving the onshore regulator enhanced visibility over cross-border capital flows.
For further information, please contact:
Ketaki Gor Mehta, Partner, Cyril Amarchand Mangaldas
ketaki.mehta@cyrilshroff.com
[1] SEBI | Measure for Ease of Doing Business – Facilitation to SEBI registered Stock Brokers to undertake securities market related activities in Gujarat International Finance Tech-city – International Financial Services Centre (GIFT-IFSC) under a Separate Business Unit (SBU).
[2] Revised Global Access Circular.
[3] International Financial Services Centres Authority.
[4] International Financial Services Centres Authority.
[5] Master Directions – Reserve Bank of India.
[6] International Financial Services Centres Authority.
[7] Section 3(d) of the IFSCA Act, 2019.
[8] Regulation 32 of the CMI Regulations.
