custodian of assets/ securities at IFSC

IFSCA circular dated 24th February, 2021 allowing custodians of assets/ securities to set up branch office at GIFT-IFSC. Salient features are as under:

Entity registered and regulated in India as a custodian

  1. Any entity registered as a custodian with the Securities and Exchange Board of India (SEBI) shall be permitted to provide custodial services in GIFT-IFSC, by establishing a branch at GIFTIFSC. The branch established shall be subject to prior approval by the Authority and shall comply with the following conditions:
    a) The entity shall adequately ring fence the operational, technological and financial aspects of the branch in GIFT-IFSC from its domestic operations.
    b) The entity shall ensure financial segregation by allocating funds to the tune of USD 700,000 towards its IFSC branch. The entity shall submit a declaration to the Authority in this regard.
    Entity registered and regulated in overseas jurisdictions
  2. Any entity regulated as a custodian in a foreign jurisdiction, shall be permitted to provide custodial services by establishing a branch at GIFT-IFSC. The branch established shall be subject to prior approval by the Authority and shall comply with the following conditions:
    a) The entity is from a Financial Action Task Force (FATF) compliant jurisdiction
    b) The entity is registered as a custodian and regulated by a securities market regulator in its home jurisdiction
    c) The entity shall adequately ring fence the operational, technological and financial aspects of the branch in GIFT-IFSC from its overseas operations
    c) The entity shall ensure financial segregation by allocating funds to the tune of USD 700,000 towards its IFSC branch. The entity shall submit a declaration to the Authority in this regard
    d) The entity should have a minimum net worth of USD 7 million
  3. Any entity regulated as a capital market intermediary in a foreign jurisdiction, shall be permitted to provide custodial services by establishing a branch at GIFT-IFSC. The branch established shall be subject to prior approval by the Authority and shall comply with the following conditions:
    a) The entity is from a Financial Action Task Force (FATF) compliant jurisdiction
    b) The entity is registered as a capital market intermediary and regulated by a securities market regulator in its home jurisdiction
    c) The entity shall adequately ring fence the operational, technological and financial aspects of the branch in GIFT-IFSC from its overseas operations.
    d) The entity shall ensure financial segregation by allocating funds to the tune of USD 3 million towards its IFSC branch. The entity shall submit a declaration to the Authority in this regard
    d) The entity should have a minimum net worth of USD 35 million
    Entity not falling under any of the above categories
  4. Any entity shall be permitted to provide custodial services by establishing a subsidiary at GIFT-IFSC. The subsidiary established shall be subject to prior approval by the Authority and comply with the following conditions:
    a) The entity is from a Financial Action Task Force (FATF) compliant jurisdiction
    b) The subsidiary should have a net worth to the tune of USD 70 million. The entity shall submit a declaration to the Authority in this regard.
    Additional requirements
  5. The entity shall obtain a certificate of recognition from the Authority prior to commencement of operations of its branch or subsidiary, whichever is applicable.
  6. All the other fees applicable to a custodian in IFSC shall be applicable to such a branch or subsidiary of the entity.
  7. An entity desirous of obtaining a certificate of recognition as a custodian shall submit an application form provided at Annexure I, along with supporting documents, to the Authority. The application shall be accompanied with an application fee of USD 1000 and a recognition fee of USD 10,000. In the event the Authority refuses to grant recognition to the applicant, the
    recognition fee shall be refunded to the applicant.
  8. The certificate of recognition granted by the Authority shall be valid for a period of three years from the date of grant of recognition or its renewal.
  9. The branch office shall have adequate mechanisms for the purposes of reviewing, monitoring, and evaluating the controls, systems, procedures and safeguards.
  10. The branch office shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by the Authority or the Central Government.

https://ifsca.gov.in/Viewer/Index/153

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