As one of the largest and fastest growing economies, India has been a major consumer of International financial services (IFS). The 2007 report of the committee set up by the Ministry of Finance (popularly known as the Percy Mistry Committee Report) had estimated that even under conservative assumptions, purchases by Indian households and firms of IFS will be nearly $50 billion by 2015, and could exceed $120 billion by 2025. Thus, with the objective of bringing back to India the international financial service business generated from India, and gradually emerge as an international financial services hub at the regional and global level, Government of India operationalized India’s maiden International Financial Services Centre (IFSC) at GIFT Multi Services SEZ in April 2015.
The International Financial Services Centres Authority Act was passed in December 2019 and the IFSCA commenced its operation as a unified regulator in October 2020. The IFSCA has been vested with the combined powers of four domestic regulators namely RBI, SEBI, IRDAI and PFRDA and has a mandate to develop and regulate financial institutions, financial services, and financial products within the IFSCs in India.
The strategic objectives of IFSCA are as follows:
- To position the IFSC as a leading internationally recognized centre with trusted business and tax regulation, and judicial & dispute resolution system.
- To become a gateway for global capital flows into and out of India.
- To emerge as a regional/global hub for international financial services.
NSE IFSC to introduce trading in US Stocks
NSE International Exchange has announced that trading in select US Stocks will soon be facilitated through the NSE IFSC platform. The offering will be in the form of unsponsored depository receipts.
IFSCA has facilitated the same under the Regulatory Sandbox. The entire trading, clearing, settlement and holding of US Stocks will be under the regulatory structure of IFSC Authority, stated an official release here Monday. This initiative is a first-of-its-kind at IFSC where Indian retail investors will be able to transact on the NSE IFSC platform under the Liberalized Remittance Scheme (LRS) limits prescribed by the Reserve Bank of India (RBI), it added.
The business model offered by NSE IFSC will not only provide an additional investment opportunity to the Indian investors but also make the entire process of investment easy and low-cost. Investors will be provided with an option to trade in fractional quantity / value when compared to the underlying shares traded in US markets. The proposed framework will make US stocks affordable to Indian retail investors.
NSE IFSC Clearing Corporation Limited (NICCL) is to offer its robust risk management framework, facilitate clearing and settlement of all trades in depository receipts and provide settlement guarantee in respect to all trades executed on the NSE IFSC platform. Furthermore, all the trades will be covered under the investor protection framework at NSE IFSC.