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In a consultation paper released recently, the International Financial Services Centre Authority (IFSCA) has proposed reduction of net worth requirement for investment advisers and distributors to set up business in IFSC.
According to the new proposals, while the net worth requirement for investment advisers will be reduced to $25,000, such a requirement for distributors will be $50,000.
The proposals also include registration, regulation and supervision of these investment advisers and distributors. Here are some key proposals:
For Investment advisers
- A registered investment adviser in IFSC can cater to residents outside India, non-resident Indians, non-individual residents in India who are eligible under Foreign Exchange Management Act (FEMA) to invest funds offshore and individual residents in India who are eligible under FEMA to invest funds offshore
- Investment advisers cannot enter into transactions on its own account, which is contrary to their advice for a period of 15 days from the day of such advice
- Adviser should disclose all material information like disciplinary history and the terms and conditions
- Advisers will also have to disclose holdings or positions, potential or actual conflict of interest, key features, warnings and disclaimers of the products or securities
- Advisers should not receive any consideration by way of remuneration or compensation from any person other than the client being advised
For Distributors
- Distributors operating in IFSC can distribute capital market products/services that are approved for distribution to any client in IFSC or foreign jurisdiction and to any client, individual or investor in India
- While functioning in IFSC, distributors should ensure compliance with all applicable laws as prevalent in the jurisdictions of issuers, service providers and clients.
