Tuesday, March 24, 2015

International Financial Services Centers


International Financial Services Center (IFSC)
Capital Market regulator Securities and Exchange Board of India (SEBI) approved a new set of norms for setting up of capital market infrastructure in India's first International Financial Services Center (IFSC) in Gujarat's GIFT City (Gujarat International Finance Tec-City)



Capital Market Infrastructures
The followings are the financial services infrastructure to be build -


SEBI (International Financial Services Center) Guidelines, 2015
SEBI approved the guidelines as follows -
  • Stock Exchange - A stock exchange can be set up with Rs. 25 crore capital, instead of Rs. 100 crore (normal requirement). However, the stock exchange need to raise Rs. 100 crore within 3 years of establishment.
  • Clearing Houses - A clearing corporation can be set up with Rs. 50 crore capital, instead of Rs. 300 crore (normal requirement). It need to raise Rs. 300 crore within 3 years of establishment.
  • Depository Receipts Scheme - Issue of Depository receipts (e.g., ADR, GDR, etc.) and other securities by foreign issuers under the Foreign Currency Depository Scheme, 2014 will also be allowed.
  • Special Economic Zones (SEZ) - IFSC will be set up under the SEZ Act, 2005.
  • Eligibility - Non-Residential Indians (NRI), Foreign Institutional Investors (FII), residential Indians are eligible under the Foreign Exchange Management Act (FEMA) to participate in IFSC.


GIFT City - first IFSC in India
Gujarat International Finance Tec-City (GIFT City) would be India's first IFSC, with which top bourses Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have already signed Memorandum of Undertakings (MoU) for setting up international stock exchanges.



Expected trading
This move is expected to capture an estimated Rs. 1,334 crore / day or Rs. 2 lakh crore / year worth of trading in Rupee derivatives that currently goes out of India. Indian IFSC would be on lines of global financial centers of Singapore and Dubai.


Note -
GIFT City chief executive - Shri Ramakant Jha
SEBI chairman - Shri U.K.Sinha





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