Segregated Nominee Account Structure in International Financial Service Centre

May 25, 2018 | by Avantis RegTech Legal Research Team

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General Compliance

With a view to further facilitate ease of market access for foreign investors in International Financial Service Centre (IFSC) and based on feedback received from market participants, the Securities and Exchange Board of India (SEBI) has decided to permit Segregated Nominee Account Structure in IFSC wherein orders of foreign investors may be routed through eligible Segregated Nominee Account Providers (Providers), for trading on stock exchanges in IFSC while adhering to regulatory requirements, inter alia, relating to identification of end-client, Unique Client Code, order placement at client level, client level margining and position limits.

Entities eligible to offer Segregated Nominee Account Structure are:

i.                    SEBI-registered brokers in IFSC,

ii.                  SEBI registered FPIs (Category I and II), and

iii.                Trading / Clearing members of international stock exchanges / clearing corporations that are regulated by a member of Financial Action Task Force (FATF)

Stock Exchanges shall lay down eligibility criteria/norms for ‘Providers’, including ‘net worth’, which shall not be less than that prescribed by other leading stock exchanges offering similar structures. The conditions for registration shall include clauses/provisions for obtaining information relating to the end-clients of ‘Providers’, as and when sought.

The other broad features of the Segregated Nominee Account Structure are given in Annexure to this Circular.

It shall be obligatory on the stock exchanges, brokers and Providers to furnish to SEBI, inter alia, information relating to trades on stock exchanges in IFSC originated by/through Providers, including KYC details of their end-clients, as and when requested.

Stock exchanges in IFSC shall ensure that the provisions of Prevention of Money Laundering Act, 2002 (PMLA) and the rules thereof, including those relating to capturing the KYC information for sharing with the Central KYC Registry (CKYCR) to the extent applicable to FPIs, are adhered to by ‘Providers’ for their end-clients.

[Circular No.: SEBI/HO/MRD/DRMNP/CIR/P/2018/83]



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