IFSCA notifies new market-abuse framework for securities markets in GIFT City
The International Financial Services Centres Authority (IFSCA) has notified a new regulatory framework to curb market abuse in the securities markets at GIFT City, bringing provisions related to insider trading, fraudulent and manipulative practices and unfair trading under a single set of regulations.
The IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, are aimed at strengthening investor protection and establishing a comprehensive framework to prohibit market-abuse activities in the International Financial Services Centre (IFSC).
The new framework effectively replaces the Securities and Exchange Board of India’s (SEBI) existing insider trading and fraudulent and unfair trade practices regulations for the IFSC. Once the new regulations come into force, 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.
Under the new regulations, IFSCA can take action against violations under the governing Act. Such action can include issuing a warning or censure and suspending or cancelling the registration of regulated entities or persons.
The move comes as the GIFT City regulator has stepped up enforcement measures in recent months against alleged regulatory violations, including actions involving penalties and cancellation of registrations.
The regulations prohibit a wide range of activities that can distort the functioning of securities markets. These include fraudulent transactions, manipulation of securities prices and benchmarks, creation of artificial demand, circular trading and dissemination of false or misleading information.
The framework also specifically addresses the practice of repeatedly placing and cancelling orders without any intention of executing them when such activity is aimed at artificially influencing the supply, demand or price of securities.
It further prohibits the dissemination of false or misleading information through physical or digital media, unauthorised transactions on behalf of clients, artificial trading activity and the planting of false or misleading news that could induce investors to buy or sell securities.
The insider trading provisions prohibit insiders from communicating material non-public information, except where such communication is made for legitimate purposes, in the performance of duties or for meeting legal obligations.
