IFSCA published a consultation paper on August 27, 2026 (‘Consultation Paper’) which proposes to amend the IFSCA (Fund Management) Regulations, 2025 (FM Regulations) in order to make the secondary listing of ETFs and Investment Trusts in the IFSC easier. The proposed amendments will allow an ETF, that is already listed in India or a foreign jurisdiction, to obtain a secondary listing on a recognised stock exchange in the IFSC, without requiring its manager to establish itself as a Fund Management Entity (FME) in the IFSC, subject to specified eligibility, representation, disclosure and exchange requirements.
Amendments to Regulation 114 – Secondary listing
Currently, Regulation 114 of the FM Regulations permits an ETF or Investment Trust listed in India outside the IFSC or in a foreign jurisdiction, to list and trade on a recognised stock exchange in the IFSC. Regulation 114, as presently framed, however, proceeds on the basis that the ETF or Investment Trust is brought to the IFSC by a FME registered with IFSCA. The Consultation Paper proposes a route whereby, an ETF or Investment Trust, that is listed in another jurisdiction, can have a secondary listing on an exchange in GIFT-IFSC even though the investment manager of such ETF or Investment Trust does not have a presence in GIFT-IFSC. The ETF or Investment Trust will only have to appoint a local representative in the IFSC.
Eligibility of the ETF’s manager
The Consultation Paper proposes to introduce Regulation 114A to provide that the manager of the ETF must either be a Registered FME (Retail) or an entity licensed or regulated to undertake fund management for retail investors in India or a foreign jurisdiction by the relevant financial sector regulator and satisfy IFSCA's fit and proper requirements. The recognised stock exchange may also apply additional criteria specified by IFSCA or the exchange.
Eligibility of the ETF
The Consultation Paper proposes to introduce Regulation 114B to provide that the ETF must have index replication as its primary objective and must be subject in its home jurisdiction to a regulatory regime protecting investors, ensuring orderly and transparent operations, addressing misuse of unpublished price sensitive information and market manipulation, and dealing with conflicts of interest. Ordinarily, the ETF must also have at least 12 months of listing and trading history. This seasoning requirement (of having 12 months of listing and trading history) would not apply where the ETF is launched by a Registered FME (Retail) or by a manager having a 'soundtrack record'.
For a manager to be considered to have a soundtrack record, it should have at least five years' experience managing AUM of at least USD 200 million with more than 25,000 investors and should have under its management at least five ETFs listed and traded on a stock exchange in India, IFSC or a foreign jurisdiction at the time of filing the secondary listing application.
Local representative
The Consultation Paper proposes to introduce Regulation 114C to provide that where the ETF manager is not a Registered FME (Retail), a representative must be appointed in the IFSC. The representative may be an associate of the manager regulated by IFSCA as an FME, Capital Market Intermediary or Banking Unit, a Registered FME (Retail), or a Registered FME (Non-Retail) authorised to provide third-party fund management services. The representative would act as the local liaison, including for investor grievances and disclosures, service of notices and orders, provision of information to IFSCA, and notification to the exchange of suspension or other material information.
Additional disclosures
The Consultation Paper proposes to introduce Regulation 114D to provide that the manager would have to provide specified disclosures in English on the recognised stock exchange and, where applicable, in marketing material. These include the ETF's place of constitution and home regulator; a statement that it is secondarily listed in the IFSC and not constituted there; manager and representative details; regulatory registration details; roles and responsibilities; trading, market making, clearing and settlement arrangements; fees and charges; tax treatment; additional risks; grievance mechanisms; and other relevant information.
Delisting
Currently, Regulation 116 of the FM Regulations provides five separate grounds under which a stock exchange in an IFSC may delist Investment Trust or schemes or ETF, one of which is that the Investment Trust or parties to Investment Trust or FME is no longer eligible for listing or trading. The Consultation Paper proposes to amend this ground to provide that if the manager of the Investment Trust / Scheme / ETF is no longer eligible under the extant regulations1, it would be a ground for delisting.
Potential impact on the IFSC ETF market
The proposals contained in the Consultation Paper are likely to broaden the range of products available through IFSC exchanges. The Consultation Paper notes that secondary listing could provide investors access to globally recognised ETFs through an IFSC trading venue, while also bringing additional trading participants and volumes to recognised stock exchanges.
If the proposals in the Consultation Paper are implemented, it would lower the barrier for already-listed Indian and global ETFs to trade on GIFT-IFSC exchanges without the manager having to set up as a Registered FME (Retail). The new route would encourage global players who have stayed on the sidelines of GIFT IFSC to list existing, large, seasoned ETFs on NSE IX and India INX, the two stock exchanges currently operating in GIFT IFSC, without having to set up an FME of their own. This will enable NRIs, IBUs and other IFSC participants to buy well-known index products (S&P 500, Nasdaq-100, global bonds, commodities, etc.) in foreign currency on India INX / NSE IFSC. It is very likely that secondary listings will be cheaper and more transparent than many current GIFT wrappers, which often sit at higher TERs than the underlying UCITS/US ETF.
The Consultation Paper states that an increase in the number of listings and volumes ‘would deepen the market in the IFSC by bringing in more trading participants and trading volumes, and shall also be instrumental in changing the product profile available on the IFSC exchanges from the extant predominantly derivative and debt-oriented products, which are more aligned towards institutions, to equity-oriented products, which are equally relevant for the retail investors.’ Secondary listings globally already dwarf primary listings (tens of thousands of listings versus approximately 17,000 ETFs) and the model is proven as a volume engine if market-making works.2
Footnotes
1. The relevant regulation would be Regulation 114A (which the Consultation Paper proposes to introduce in the FM Regulations) and which has been discussed in this article.
2. ETFGI, “ETFGI reports Global ETF Industry Assets Reach Record US$ 23.11 Trillion at the end of July and YTD Inflows Hit All-Time High US$ 1.71 Trillion”, press release, 19 August 2026.
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