Informal Guidance on Distributor Eligibility and Dual Registration in GIFT IFSC

The International Financial Services Centres Authority (IFSCA) recently issued an informal guidance letter on August 20, 2025, in response to an application submitted by LGT Wealth India Private Limited (IFSC Branch) concerning the distribution of capital market products. This interpretative response provides essential clarity on the regulatory framework for distributors in GIFT IFSC and the potential for Fund Management Entities (FMEs) to assume dual roles.

🔎 Background

• Applicant: LGT Wealth India Pvt Ltd, a SEBI-registered Portfolio Manager and Distributor (AMFI/APMI), with an IFSC branch registered as a Non-Retail Fund Management Entity (FME) asked on Informal Guidance on Distributor.

• Queries Raised:

  1. Whether their Mumbai Head Office could distribute IFSCA-registered financial products (funds launched by GIFT City entities).

  2. Whether their Non-Retail FME in IFSC could also apply for separate Distributor registration under the IFSCA (Capital Market Intermediaries) Regulations, 2025.

📝 IFSCA’s Key Responses on Informal Guidance on Distributor

1. Distribution from Non-GIFT City Office

IFSCA referred to Para 8.3 of its Master Circular for Distributors in IFSC (Aug 5, 2025).

• Entities outside IFSC may distribute products offered by IFSC-regulated issuers if they comply with the distributor’s Code of Conduct under Schedule II of the Capital Market Intermediaries Regulations, 2025.

• LGT’s Mumbai office can distribute IFSC products subject to strict compliance and ensuring conflict of interest policies are in place.

👉 Implication: Domestic entities with SEBI/AMFI registration can extend their distribution reach to IFSC products, but compliance safeguards are critical.

2. Separate Distributor Registration for FME (Non-Retail)

IFSCA clarified that:

• An FME may apply for separate Distributor registration in IFSC.

• Approval will be subject to conditions ensuring adequate conflict management.

Indicative conditions include:

• Manpower segregation between fund management and distribution functions.

• Separation of systems, processes, bank accounts, and records.

• A board-approved conflict of interest policy to ensure client interests are not compromised.

👉 Implication: Dual registration is possible but only with clear structural and operational separations.

⚖️ Why This Matters

1. Regulatory Clarity for Global Players: The guidance provides certainty to international and domestic financial institutions exploring dual roles in GIFT City.

2. Enabling Cross-Border Distribution: By allowing Mumbai-based SEBI-registered distributors to market IFSC products, IFSCA has strengthened integration between onshore and offshore markets.

3. Robust Conflict Management: Conditions for dual registration highlight IFSCA’s focus on investor protection and governance.

4. Opportunities for Market Expansion: Asset managers, wealth managers, and distributors can now design wider product distribution strategies using both IFSC and domestic channels.

📌 Conclusion

The IFSCA’s informal guidance to LGT Wealth India marks a significant step in strengthening the distribution framework in GIFT IFSC. By clarifying the eligibility of non-IFSC entities and laying down conditions for FMEs seeking distributor roles, the regulator has enhanced regulatory certainty, governance standards, and business opportunities.

As GIFT City grows into a global financial hub, such interpretative clarifications will play a pivotal role in shaping the compliance landscape for intermediaries.

Disclaimer: This article is for general informational purposes only and is based on the International Financial Services Centres Authority (IFSCA) Informal Guidance Scheme, 2024, and the interpretive letter dated August 20, 2025, issued to LGT Wealth India Pvt Ltd. The guidance represents the views of the concerned department of IFSCA and is not binding on the Authority, nor does it constitute a conclusive decision, determination of law, or regulatory approval.

Different facts, circumstances, or subsequent regulatory changes may lead to a different interpretation. Readers are advised not to treat this as professional advice and should consult qualified professionals or approach IFSCA directly for specific business or compliance decisions.