RBI and Sebi have cleared a so-called enabling framework for market participants, but that is only a starting point and there are no clear guidelines, say exchange officials
Stock and commodity exchanges have been signing up to start operations at the Ahmedabad-based Gujarat International Finance Technical (GIFT) city, but a launch is still far away due to unclear regulations.
GIFT is pegged to be an international financial centre on the lines of London and Singapore.
Currently, the Reserve Bank of India and the Securities and Exchange Board of India (Sebi) have cleared a so-called enabling framework for market participants willing to set up operations. But that is just a starting point and there are no clear guidelines, said senior exchange officials.
National Stock Exchange of India Ltd (NSE), BSE Ltd and Multi Commodity Exchange (MCX) have all expressed interest to start operations at GIFT.
“An enabling framework takes care of regulatory clearances initially, but if we are to look at IFSC (International Financial Services Centre) from a strategic perspective then we need clearer regulations on issues such as outward and inward remittances, broker registration guidelines," said an NSE official on condition of anonymity.
Regulators also need to have guidelines in place for prevention of money laundering, know your client and the extent of foreign investor participation.
Emails sent to BSE, NSE and MCX were not answered.
“There is lack of clarity on who can participate in the exchange set up in GIFT and the products they can trade in. If there is something already in place then it is us who have missed it in the fine print," said a MCX official.
BSE has already received an in-principle approval from the ministry of corporate affairs to set up operations at GIFT and has applied to Sebi for an in-principle approval, it said in its share sale prospectus.
Then, BSE said it will set up an international exchange at GIFT only after Sebi finalizes regulations applicable to exchanges.
“Although Sebi issued guidelines for the establishment of international financial services centres in March 2015, the regulations are not yet finalized and it is unclear as to when the regulations will be finalized and what exactly will be permitted under the final regulations," said the BSE prospectus. Last week, BSE completed a mock trading at GIFT with its existing members.
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