Secondary Listing of Global ETFs in GIFT IFSC: Understanding IFSCA’s Proposed Framework

The International Financial Services Centres Authority (IFSCA) has proposed an important regulatory framework for the secondary listing of Exchange Traded Funds (ETFs) in GIFT IFSC. Through its Consultation Paper dated 27 August 2026, IFSCA proposes to permit fund managers regulated in India or foreign jurisdictions to bring existing ETFs for secondary listing on recognised stock exchanges in IFSC, subject to prescribed eligibility and investor-protection conditions.

Growing Fund Ecosystem and the Need for a Global ETF Framework

The proposal comes at a time when GIFT IFSC’s fund management ecosystem is expanding rapidly. As of July 31, 2026, IFSC had 235 Fund Management Entities (FMEs) and 416 schemes. Retail participation has also increased significantly following greater tax clarity for retail schemes and ETFs. Investor numbers in Retail Schemes rose from 255 as of September 30, 2025, to 3,438 as of March 31, 2026. Against this backdrop, IFSCA is seeking to broaden the range of investment products available through IFSC and facilitate access to globally established ETFs.

What is Secondary Listing of an ETF?

An ETF is an open-ended pooled investment vehicle that holds a portfolio of securities and trades on a stock exchange like a listed security. ETFs typically combine diversification, transparency, intraday liquidity and relatively low investment costs. Authorised participants facilitate creation and redemption of ETF units, while market makers support liquidity through continuous buy and sell quotations.

A secondary listing allows an ETF already listed in its home jurisdiction to also trade on an exchange in another jurisdiction.

Importantly, secondary listing does not result in the creation of a new investment product. The ETF continues to retain its:

• primary listing in the home jurisdiction;
• existing fund manager;
• underlying portfolio; and
• International Securities Identification Number (ISIN).

The IFSC exchange therefore functions as an additional trading venue for an ETF that continues to be primarily regulated in its home market.

Existing Position under the IFSCA Fund Management Regulations

Regulation 114 of the IFSCA (Fund Management) Regulations, 2025 already permits an ETF or Investment Trust listed in India outside IFSC or in a foreign jurisdiction to list and trade on a recognised stock exchange in IFSC, provided it complies with the laws of its home jurisdiction.

However, the existing framework proceeds on the basis that the product is brought into IFSC by an FME registered with IFSCA.

During IFSCA’s interactions with global fund managers, foreign managers reportedly expressed interest in obtaining secondary listings for their ETFs in IFSC. Since these fund managers are already regulated in their respective home jurisdictions, requiring them to establish an FME in IFSC solely to secondary list an existing ETF may be disproportionate to the activity involved.

The proposed framework therefore seeks to allow eligible home-jurisdiction-regulated managers to access IFSC without necessarily obtaining separate FME registration.

Who Can Bring an ETF for Secondary Listing?

Proposed Regulation 114A prescribes eligibility conditions for an ETF manager.

The recognised stock exchange would need to ensure that the manager is either:

• a Registered FME (Retail) in IFSC; or
• an entity licensed or regulated to conduct fund management for retail investors in India or a foreign jurisdiction by the relevant financial sector regulator.

A manager falling under the second category would also need to satisfy the fit and proper requirements under Regulation 9(1) of the Fund Management Regulations and any additional conditions specified by IFSCA or the recognised stock exchange.

This approach allows globally regulated managers to participate while maintaining regulatory standards appropriate for products accessible to retail investors.

Eligibility Criteria for ETFs

Proposed Regulation 114B introduces product-level eligibility requirements.

First, the ETF should have replication of an index as its primary objective. IFSCA’s rationale is that index-replicating ETFs are transparent, rule-based products whose performance can be evaluated against a published benchmark.

Second, the ETF must be subject to a regulatory regime in its home jurisdiction that:

• protects investor interests;
• ensures orderly and transparent operations;
• prevents misuse of unpublished price-sensitive information;
• prevents market manipulation; and
• addresses conflicts of interest.

The framework therefore relies considerably on the quality of regulation in the ETF’s primary jurisdiction.

Twelve-Month Track Record and Relaxation for Established Managers

Ordinarily, an ETF seeking secondary listing would need a track record of being listed and traded for at least 12 months on a stock exchange in India or a foreign jurisdiction.

However, the proposed regulation recognises that an established manager may launch a new ETF that does not have a 12-month history. Accordingly, the seasoning requirement may be waived for an ETF launched by a Registered FME (Retail) or a manager having a “sound track record.”

For this purpose, a sound track record is proposed to mean a manager having:

• at least five years of experience;
• at least USD 200 million of assets under management;
• more than 25,000 investors; and
• at least five ETFs under its management that are listed and traded in India, IFSC or foreign jurisdictions.

This balances product seasoning requirements with recognition of an experienced fund manager’s institutional track record.

Local Representative in GIFT IFSC

A significant component of the proposed framework is the appointment of a local representative.

Where the ETF manager is not a Registered FME (Retail), the recognised stock exchange would be required to ensure that a representative is appointed in IFSC before the ETF is admitted for secondary listing and throughout the continuation of the listing.

An eligible representative may include an associate of the ETF manager regulated by IFSCA as an FME, Capital Market Intermediary or Banking Unit. A Registered FME (Retail), or an eligible Registered FME (Non-Retail) authorised to provide third-party fund management services, may also act as the representative.

The representative would act as the local regulatory bridge between the foreign ETF manager, investors and IFSCA. Its responsibilities would include investor liaison and grievance redressal, receiving regulatory notices, furnishing information sought by IFSCA and notifying the exchange about suspension, trading halts or other material developments affecting the ETF in its home jurisdiction.

Investor Protection and Disclosure Requirements

Investor protection remains central to the proposed framework. Investors in IFSC should receive at least the same level of protection as investors in the ETF’s home jurisdiction.

The manager would also be required to provide relevant disclosures in English on the recognised IFSC stock exchange. The proposed disclosures include:

• jurisdiction and place of constitution of the ETF;
• details of the home regulator;
• clarification that the ETF is only secondary listed and not constituted in IFSC;
• details and regulatory status of the ETF manager;
• details of the local representative;
• respective roles of the manager and representative;
• trading, market-making, clearing and settlement arrangements;
• fees and charges;
• applicable tax treatment;
• additional risks associated with secondary listing; and
• investor grievance mechanisms.

Further, information and documents submitted to the home exchange would generally need to be made available in English to the IFSC exchange at the same time.

Role of IFSC Stock Exchanges and Market Makers

The application for secondary listing would be filed with the recognised stock exchange in IFSC. The exchange would verify eligibility and intimate IFSCA before admitting the ETF.

Recognised stock exchanges would also frame detailed rules governing market makers, including eligibility, responsibilities, minimum number of market makers, maximum spread, minimum quantity, availability hours, incentives, margins and settlement arrangements.

This is particularly important because adequate market making is essential for ensuring liquidity and orderly price discovery in secondary-listed ETFs.

Alignment with International Practices

IFSCA has examined regulatory practices in jurisdictions including Hong Kong, Singapore and Mexico.

While these jurisdictions do not ordinarily require an overseas fund manager to establish itself in the host jurisdiction, their frameworks generally rely on certain common safeguards: credible home-jurisdiction regulation, an established product or manager track record, appointment of a local representative, timely disclosure and market-making arrangements.

The proposed IFSC framework seeks to incorporate similar principles while adapting them to the regulatory architecture of GIFT IFSC.

What the Proposal Could Mean for GIFT IFSC

The proposed framework could materially broaden the investment product landscape in GIFT IFSC.

For investors, it could provide access to internationally recognised ETFs covering global equities, bonds and other asset classes through IFSC exchanges. For exchanges, additional listings may help deepen trading activity and diversify the current product mix beyond predominantly institutional, debt and derivative products.

For international fund managers, the proposal offers a calibrated entry route into GIFT IFSC without necessarily requiring the establishment of a separate FME solely for secondary listing. At the ecosystem level, greater ETF listings, market-making activity and investor familiarity could also support the future development of ETFs originated and domiciled within IFSC itself.

Conclusion

IFSCA’s proposed framework represents a significant step towards integrating GIFT IFSC more closely with global ETF markets. By recognising home-jurisdiction regulation while introducing eligibility standards, a local representative, market-making requirements and enhanced disclosures, the framework seeks to balance market development with investor protection.

If implemented, secondary listing could provide global ETF managers with a relatively efficient route into the IFSC ecosystem while expanding investment choices and market depth in GIFT City. However, the framework is presently at the consultation stage, and the final regulatory position will depend on amendments ultimately notified by IFSCA.