The International Financial Services Centres Authority proposed allowing research entities in GIFT City to offer model portfolios. In a consultation paper issued on Monday, the regulator said these baskets of securities must follow strict disclosure rules. IFSCA has sought comments from stakeholders on this new framework by November 30.
GIFT City in Gujarat, representing the expansion of financial services and investment products in India
The International Financial Services Centres Authority (IFSCA) has proposed allowing research entities in GIFT City to offer model portfolios, subject to disclosure and operational requirements, as it seeks to expand the scope of research products available to investors.
In a consultation paper issued on Monday, the regulator proposed clarifying that research recommendations under the Capital Market Intermediaries (CMI) Regulations, 2025, would include model portfolios -- baskets of securities with specific weightages based on investment themes or strategies.
The proposal would require entities, including broker-dealers, to register as research entities to offer such portfolios.
The proposed framework requires research reports to specify the geographical universe, asset classes, underlying themes, selection methodology and recommended investment horizon.
Portfolios would also have to disclose risks and follow a predefined update and rebalancing schedule. Any rebalancing outside scheduled intervals would require the rationale to be communicated to clients.
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IFSCA has also proposed that performance claims be benchmarked consistently against relevant indices. Compliance with the guidelines would be covered under the existing compliance audit framework.
The regulator said model portfolios in IFSC are expected to be largely global, potentially spanning equities, fixed-income ETFs and commodity ETFs, among other asset classes.
The current regulations allow research entities to publish or provide research reports on securities; however, model portfolios are not allowed at present.
"If the research report does not ascribe weightages to the components of basket of securities, then merely a summary or consolidated presentation of securities recommended shall not be regarded as a model portfolio," noted the consultation paper.
The proposal follows representations from the industry to allow model portfolios in GIFT IFSC.
IFSCA has sought comments from stakeholders by November 30.
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