Research Entities in IFSC (GIFT City): A Focused Regulatory and Compliance Overview

Introduction, Legal Basis and Scope of Research Entities

The International Financial Services Centre (IFSC) at GIFT City has been conceptualised as India’s offshore financial jurisdiction, enabling globally competitive financial services under a unified regulatory regime. Within this ecosystem, Research Entities have been formally recognised and regulated by the International Financial Services Centres Authority (IFSCA) to ensure integrity, transparency, and investor protection in the dissemination of financial research.

The legal framework governing Research Entities is anchored in the International Financial Services Centres Authority Act, 2019, read with the IFSCA (Capital Market Intermediaries) Regulations, 2025. To operationalise these provisions, IFSCA has issued a Master Circular for Research Entities dated August 05, 2025, consolidating all requirements relating to registration, permissible activities, governance, conduct, and compliance. This Master Circular forms the primary regulatory reference for Research Entities operating in the IFSC.

Registration and Permissible Activities of Research Entities

Mandatory Registration with IFSCA

Any entity intending to operate as a Research Entity in the IFSC is required to obtain registration from IFSCA under the Capital Market Intermediaries Regulations, 2025. Such registration is a prerequisite for carrying on research-related activities within the IFSC framework. Once granted, the certificate of registration is perpetual in nature, subject to continued compliance with applicable regulations and the validity of the Letter of Approval issued under the Special Economic Zones Act, 2005.

Research Entities are categorised as regulated capital market intermediaries and are therefore subject to continuous regulatory oversight by IFSCA.

Permissible Activities

The principal activity permitted to a Research Entity is the preparation, provision, and publication of research reports for consideration. Research reports typically include analytical insights, opinions, or recommendations relating to securities, issuers, or markets, intended to assist clients in making informed investment decisions.

A key regulatory restriction applies where research relates to securities listed or proposed to be listed on stock exchanges in India. In such cases:

• Research services may be provided only to non-resident clients, and
  
• The Research Entity must comply with the relevant requirements prescribed under the SEBI (Research Analysts) Regulations, 2014, as made applicable under the IFSC framework.
  

This restriction preserves the offshore character of the IFSC and avoids regulatory overlap with India’s domestic securities market.

Restriction on Other Activities

A Research Entity registered under the CMI Regulations is permitted to undertake only research-related activities. Any proposal to carry out additional activities—such as investment advisory, broking, or distribution—requires separate registration or authorisation from IFSCA under the relevant regulations. This ensures regulatory clarity and mitigates conflicts of interest.

Governance, Conduct, Independence and AML Compliance

Governance and Key Managerial Personnel

Every Research Entity is required to appoint:

• A Principal Officer, and
  
• A Compliance Officer,
  

both of whom must be based in the IFSC and must meet the qualification and experience criteria prescribed under the regulations. The Principal Officer is responsible for the overall functioning of the Research Entity, while the Compliance Officer ensures compliance with regulatory and legal obligations.

Code of Conduct and Ethical Standards

Research Entities are mandatorily required to establish and implement a Code of Conduct aligned with Schedule II of the Capital Market Intermediaries Regulations. The Code of Conduct emphasises:

• Integrity and fairness in research dissemination
  
• Professional competence and due diligence
  
• Transparency and accountability
  
• Effective management of conflicts of interest
  

Adherence to the Code of Conduct is a core element of regulatory compliance and supervisory assessment by IFSCA.

Conflict of Interest and Independence of Research

IFSCA places significant emphasis on the independence and objectivity of research. Research Entities must identify and manage actual or potential conflicts of interest through documented internal policies and control procedures. Mandatory disclosures are required in research reports where the Research Entity, its analysts, or their associates have material financial interests, ownership stakes, or business relationships with the subject company.

Further, Research Entities must maintain robust information barriers to ensure that research activities remain insulated from other business interests of the entity or its group.

Personal Trading Controls

To safeguard market integrity, Research Entities must implement policies governing personal trading by research analysts and their associates. These policies typically include monitoring, pre-approval mechanisms, and restrictions on trading contrary to published research recommendations, except in limited and documented circumstances.

AML, CFT and KYC Compliance

Research Entities are subject to the IFSCA Anti-Money Laundering, Counter-Terrorist Financing and Know Your Customer Guidelines. Compliance obligations include registration on the FIU-IND FINGate 2.0 portal, ongoing customer due diligence, transaction monitoring, and regulatory reporting. These requirements integrate Research Entities into India’s broader financial crime prevention framework.

Strategic and Operational Considerations for Research Entities

The IFSC offers a regulated yet globally credible platform for offshore research operations servicing international clients. However, the regulatory framework is intentionally compliance-intensive. IFSCA expects Research Entities to demonstrate real substance through governance structures, internal controls, documentation, and personnel presence in the IFSC.

Entities considering the IFSC route must carefully evaluate client geography, scope of research coverage, and internal compliance readiness. A compliance-first approach not only mitigates regulatory risk but also enhances the credibility and acceptability of research outputs in global markets.

Conclusion

Research Entities operating in IFSC GIFT City function within a clearly defined and robust regulatory framework established under the Capital Market Intermediaries Regulations, 2025 and the Master Circular dated August 05, 2025. The framework underscores IFSCA’s focus on research integrity, independence, transparency, and investor protection, while enabling offshore research capabilities for global financial markets.

For entities seeking to establish or operate research functions in the IFSC, sustained regulatory compliance is foundational. With appropriate structuring, disciplined governance, and continuous adherence to conduct and AML standards, the IFSC provides a credible and future-ready jurisdiction for research-led financial institutions.