The International Financial Services Centres Authority (IFSCA) has notified a comprehensive market-abuse framework for securities markets in GIFT City, bringing together provisions dealing with insider trading, fraudulent and manipulative practices, and unfair trading under a single regulatory structure. According to reports from Business Standard, the IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, are designed to protect investors and establish a framework to prohibit market abuse in the financial centre. The new framework effectively replaces the Securities and Exchange Board of India's (Sebi's) existing insider trading and fraudulent and unfair trade practices regimes for the IFSC.
Under the new regulations, IFSCA can take action against violations including issuing warnings or censures, suspending or cancelling the registration of regulated entities or persons under the governing Act. As reported by Business Standard, the GIFT City regulator has stepped up enforcement actions in recent months, with directions including penalties and cancellation of registration. The rules prohibit fraudulent transactions, manipulation of securities prices and benchmarks, creation of artificial demand, circular trading and dissemination of false or misleading information.
The framework prohibits insiders from communicating material non-public information except for legitimate purposes, performance of duties or discharge of legal obligations. According to the regulations, an insider in possession of such information is also prohibited from trading or causing another person to trade in the concerned securities. Trades carried out while in possession of such information will be presumed to have been based on that information, subject to specified defences. Designated persons, including controlling shareholders and directors, must report trades exceeding a specified quarterly threshold of $25,000 within two trading days.
Listed entities must notify exchanges and host disclosures on their websites within two working days of receiving them. As reported by Business Standard, the regulations require listed entities to establish effective internal controls and a code of conduct to prevent market abuse. These controls must cover identification and confidentiality of material non-public information, restrictions on its communication, identification of employees with access to such information and periodic reviews of the controls.
From the commencement of the new regulations, Sebi's Prohibition of Insider Trading Regulations, 2015, and Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market Regulations, 2003, will no longer apply in the IFSC. The framework specifically covers repeatedly placing and cancelling orders without intention to execute them, where the objective is to artificially alter supply, demand or prices, and bars dissemination of false or misleading information through physical or digital media.
