Public comments invited on the draft of the ‘International Financial Services Centres Authority (Fund Management) Regulations, 2022’ by 28th February, 2022
International Financial Services Centres Authority (“IFSCA”) has proposed the draft International Financial Services Centres Authority (Fund Management) Regulations, 2022 (“Regulations”) with a view to provide comprehensive and consistent regulatory framework for a host of activities related to fund management i.e., retail schemes (including exchange traded funds), non-retail schemes (alternative investment funds), PMS, investment trusts (REIT and InvIT), ESG schemes, self-managed family investment fund, etc.
Comments and suggestions, if any, are required to be addressed to Mr. Pavan Shah, Deputy General Manager, IFSCA within 28th February 2022 through e-mail at [pavan.shah@ifsca.gov.in] along with a copy to [ Kalpesh.mehta@ifsca.gov.in ] in the prescribed format (attached).
Key highlights:
• Single registration for multiple activities: A fund manager intending to undertake host of activities related to fund management can do so by seeking a single unified registration from IFSCA. A fund manager intending to manage funds or activities for non-retail investors only shall have lower eligibility requirements. Further, detailed eligibility and regulatory requirements for fund managers, retail schemes, nonretail schemes, venture capital schemes, portfolio management services and investment trusts along with requirements in terms of minimum Key Management Personnel (“KMPs”) have also been prescribed in the Regulation;
• Green Channel: Venture Capital Schemes or non-retail schemes soliciting money from accredited investors only shall qualify for a green channel i.e., the schemes filed can open for subscription by investors immediately upon filing with IFSCA. The requirements on scheme size, number of investors, permissible investments, etc. have been detailed in the draft Regulation;
• Exchange Traded Funds (“ETFs”): ETFs offer a means to gain exposure to specific markets or asset classes at a low cost, registered fund managers in IFSC shall be able to launch not just Index based ETFs but also Active ETFs and Commodity based ETFs. Fund Managers for Gold and Silver ETFs in addition to physical bullion shall also be able to invest directly in Bullion Depository Receipts to be traded in IFSC. Innovative structures for ETFs shall be considered with prior approval of IFSCA and the concerned stock exchanges.
• Stressed Assets: Realising the important role of IFSC in the Government initiative of addressing the issue of NPAs faced by banks, a framework has been prescribed for special situation funds to be launched by fund managers in IFSC.
• Environment Social Governance (“ESG”): Growing number of investors expect fund managers to make ESG issues integral to their investment strategies. With the intent of making IFSC as a hub for host of activities related to sustainable finance, disclosures have been proposed to be mandated at entity level and scheme level.
• Family Office: Globally, there is an increasing need for having a formal structure for managing and preserving the wealth of the HNIs and Ultra HNIs and their families. Accordingly, a framework to facilitate self-managed investment fund of a family office has been proposed.
In addition to above, the draft regulations detail the role of various entities, prescribes code of conduct, advertisement code, investment valuation norms and important governance requirements.
Source: International Financial Services Centres Authority
