IFSCA Introduces New Market-Abuse Rules Covering Insider Trading and Manipulation in GIFT City

The International Financial Services Centres Authority has introduced a unified market-abuse framework for securities markets operating within GIFT City, bringing insider trading, fraudulent transactions, market manipulation and other unfair trading practices under a dedicated regulatory regime for India's International Financial Services Centre.

The IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026 establish a comprehensive framework intended to strengthen:

investor protection,

market integrity,

information controls,

trade transparency,

and enforcement

within GIFT IFSC.

The regulations were notified as IFSCA continues developing GIFT City into a globally competitive financial centre capable of attracting international:

banks,

fund managers,

broker-dealers,

institutional investors,

issuers,

and other financial-market participants.

One of the most important changes is that the new framework effectively replaces two Securities and Exchange Board of India regulatory regimes previously applicable within the IFSC.

From the commencement of the new rules, SEBI's Prohibition of Insider Trading Regulations, 2015, and Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market Regulations, 2003, will cease to apply within the IFSC.

IFSCA will instead directly oversee market-abuse regulation under its dedicated 2026 framework.

IFSCA Creates Unified Market-Abuse Framework for GIFT City

The new regulations consolidate several forms of prohibited securities-market conduct within a single regulatory architecture.

The framework addresses:

insider trading,

fraudulent transactions,

securities-price manipulation,

benchmark manipulation,

artificial trading,

circular trading,

and:

false or misleading information.

Bringing these areas together gives GIFT IFSC a dedicated market-abuse regime tailored to its position as an international financial centre.

The objective is not simply to punish misconduct after it occurs.

The regulations also require regulated market participants and listed entities to establish systems intended to:

protect sensitive information,

identify potential conflicts,

monitor designated persons,

and prevent abusive behaviour.

Insider Trading Comes Under Dedicated IFSCA Rules

A central part of the framework deals with:

material non-public information.

Insiders are prohibited from communicating such information except where disclosure is required for:

legitimate purposes,

performance of duties,

or:

discharge of legal obligations.

An insider possessing material non-public information is also prohibited from trading in the securities concerned.

The rules additionally prevent an insider from causing another person to trade based on that information.

This is designed to protect the principle that securities markets should operate with:

fair access to material information.

Investors shouldn't be placed at a structural disadvantage because another participant has improperly obtained confidential information capable of influencing securities prices.

Trades While Holding Material Non-Public Information Face Presumption

The regulations establish an important principle regarding trades made by insiders possessing sensitive information.

Where an insider trades while in possession of material non-public information, the transaction will generally be presumed to have been influenced by that information.

The framework nevertheless provides:

specified defences.

This approach places significant importance on:

documentation,

internal controls,

trade records,

and compliance procedures.

For companies and regulated entities, simply maintaining a general insider-trading policy may therefore be insufficient.

They need systems capable of demonstrating how sensitive information was controlled and why particular transactions were permitted.

$25,000 Quarterly Trade Disclosure Threshold Introduced

The framework introduces specific disclosure requirements for designated persons.

These can include:

directors,

controlling shareholders,

and other individuals covered by the regulations.

Where trades exceed a specified quarterly threshold of:

$25,000,

the relevant transactions must be disclosed within:

two trading days.

The disclosure requirement gives regulators, exchanges and investors greater visibility into significant trading activity involving individuals with potentially sensitive access to corporate information.

The use of a dollar-denominated threshold also reflects GIFT IFSC's international-market orientation.

Listed Companies Must Disclose Reported Trades

The compliance obligation doesn't end with the designated person.

Once a listed entity receives the relevant trade disclosure, it must notify the recognised stock exchange.

The information must also be hosted on the listed entity's website.

These actions must generally be completed within:

two working days

of receiving the disclosure.

This creates a disclosure chain involving:

the designated person,

the listed entity,

the exchange,

and:

the investing public.

Timely reporting can make it easier to identify unusual transactions and improve transparency around trading conducted by individuals connected with listed companies.

Rules Target Securities-Price Manipulation

The regulations also establish broad prohibitions against activities designed to distort securities prices.

Manipulative conduct can undermine one of the most important functions of a financial market:

price discovery.

A functioning market depends on prices reflecting genuine interaction between:

buyers,

sellers,

available information,

liquidity,

and investment expectations.

Artificially influencing those factors can create misleading market signals.

IFSCA's framework therefore prohibits transactions and practices intended to manipulate securities prices or create an artificial market.

Benchmark Manipulation Is Also Covered

The rules extend beyond individual securities to:

benchmarks.

Financial benchmarks can influence the pricing and valuation of a wide range of products.

Depending on the market, they may affect:

derivatives,

structured products,

fund valuations,

interest-linked instruments,

and other financial contracts.

Manipulating a benchmark can consequently have effects extending far beyond a single transaction.

Including benchmark manipulation within the framework strengthens IFSCA's ability to address misconduct that could affect interconnected financial products.

Circular Trading and Artificial Demand Are Prohibited

The regulations specifically address:

circular trading.

Circular trading can involve transactions passing among connected or coordinated participants in ways that create an artificial impression of legitimate market activity.

Such transactions can make a security appear to have:

higher trading volume,

greater liquidity,

or stronger investor demand

than genuinely exists.

The new rules prohibit the creation of artificial demand and other trading activity designed to mislead market participants.

This becomes increasingly important as GIFT City's securities markets expand in scale and attract more international investors.

Repeated Placement and Cancellation of Orders Comes Under Scrutiny

The framework also addresses a more technologically sophisticated form of potential market manipulation:

repeatedly placing and cancelling orders without genuine intention to execute them.

Such behaviour can be used to create a false impression regarding:

market demand,

market supply,

liquidity,

or expected price direction.

If large orders appear in an order book, other market participants may interpret them as evidence of significant buying or selling interest.

Cancelling those orders after influencing market perception can therefore distort trading behaviour.

IFSCA's explicit inclusion of this conduct is particularly relevant in markets increasingly dominated by:

electronic trading,

algorithmic systems,

and high-speed order execution.

False and Misleading Information Is Prohibited

Market manipulation doesn't always require actual securities transactions.

Information itself can influence prices.

The new framework therefore prohibits the dissemination of:

false or misleading information

through physical or digital channels where that information could improperly influence investors.

This can include the planting or circulation of misleading news intended to encourage investors to:

buy,

sell,

or otherwise transact in securities.

The provision is increasingly significant because financial information can now spread almost instantly through:

social media,

messaging platforms,

websites,

digital publications,

and online communities.

False information can potentially reach thousands or millions of investors before corrections emerge.

Unauthorised Client Transactions Are Covered

The regulations also prohibit:

unauthorised transactions conducted on behalf of clients.

Financial intermediaries operate with significant responsibilities when handling client assets and executing trades.

Transactions must therefore remain consistent with:

client instructions,

applicable mandates,

and regulatory requirements.

Including unauthorised transactions within the market-abuse framework strengthens the protections surrounding investor accounts and intermediary conduct within GIFT IFSC.

Listed Entities Must Establish Internal Controls

One of the most consequential aspects of the regulations for companies is the requirement to establish:

effective internal controls.

Listed entities must develop systems capable of identifying and protecting material non-public information.

These controls need to address:

who can access sensitive information,

how that information is stored,

how it can be communicated,

and how unauthorised disclosure can be prevented.

Companies must also identify employees and other individuals who have access to material non-public information.

This creates a clearer compliance trail when regulators investigate:

information leaks,

suspicious transactions,

or potential insider trading.

Companies Need Codes of Conduct to Prevent Market Abuse

Listed entities must also maintain an appropriate:

code of conduct.

The purpose is to establish clear internal standards governing the handling of sensitive information and securities trading.

A robust code can cover areas such as:

employee trading,

pre-clearance procedures,

restricted trading periods,

confidential information,

personal-account transactions,

and reporting obligations.

The effectiveness of such policies depends on implementation rather than documentation alone.

Companies therefore need compliance processes capable of ensuring that employees understand and follow the requirements.

Internal Controls Must Be Reviewed Periodically

The regulations require periodic review of internal market-abuse controls.

This is significant because financial markets and trading technologies change rapidly.

A compliance framework designed several years earlier may not adequately address newer risks involving:

algorithmic trading,

digital communications,

remote working,

cloud-based information systems,

or increasingly sophisticated trading strategies.

Periodic reviews can help listed entities identify weaknesses before those weaknesses result in regulatory violations.

IFSCA Gains Direct Enforcement Role

The new regulations strengthen IFSCA's direct oversight of securities-market conduct within the IFSC.

For violations, the regulator can take action under the governing legal framework.

Potential measures include:

warnings,

censure,

suspension of registration,

and:

cancellation of registration.

The consequences can therefore extend beyond monetary penalties.

For a regulated entity operating within an international financial centre, suspension or cancellation of registration can directly affect its ability to conduct business.

IFSCA Has Been Increasing Enforcement Activity

The new rules arrive as IFSCA has been strengthening enforcement across GIFT City's financial ecosystem.

The regulator has taken actions involving alleged regulatory violations, including measures affecting registrations.

As GIFT City grows, enforcement capacity becomes increasingly important.

International financial institutions evaluating a jurisdiction don't consider only:

tax treatment,

infrastructure,

market access,

and operating costs.

They also assess:

regulatory predictability,

market integrity,

investor protection,

legal enforceability,

and supervisory standards.

A credible market-abuse regime therefore contributes directly to GIFT City's competitiveness as an international financial centre.

SEBI Rules Give Way to IFSC-Specific Framework

Perhaps the most important structural change is the transition from SEBI's existing market-abuse regulations to a dedicated IFSCA framework.

Previously, two major SEBI regimes applied to these areas within the IFSC:

the SEBI (Prohibition of Insider Trading) Regulations, 2015

and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

Those regimes will no longer apply within the IFSC once the new framework takes effect.

Instead, the IFSCA regulations become the principal market-abuse framework for GIFT City's securities markets.

This reinforces the broader development of IFSCA as the unified regulator responsible for India's international financial-services ecosystem.

GIFT City Is Building an Independent Regulatory Architecture

The transition also reflects the unusual regulatory structure of GIFT IFSC.

IFSCA serves as the unified authority regulating financial products, financial services and financial institutions operating within India's International Financial Services Centres.

Its mandate spans areas that would otherwise involve multiple domestic regulators.

That structure allows GIFT IFSC to develop rules specifically designed for an international financial marketplace.

A dedicated market-abuse regime is another step toward creating a more complete regulatory architecture covering:

capital markets,

banking,

fund management,

insurance,

financial intermediaries,

and other international financial services.

Stronger Rules Could Support Institutional Investor Confidence

The commercial significance of the regulations extends beyond compliance.

International institutional investors generally require strong safeguards against:

insider trading,

price manipulation,

information asymmetry,

and fraudulent trading practices.

Weak market integrity can increase risk premiums and discourage institutional participation.

Conversely, clear enforcement rules and strong disclosure requirements can increase confidence that investors are operating within a transparent marketplace.

For GIFT City, this is particularly important because its growth strategy depends heavily on attracting:

global asset managers,

international banks,

foreign investors,

multinational companies,

and sophisticated financial intermediaries.

Compliance Costs Could Rise for Market Participants

The new regime will also create operational requirements.

Listed entities and regulated participants may need to review:

internal compliance systems,

employee-trading policies,

information barriers,

surveillance procedures,

reporting infrastructure,

and governance frameworks.

Some institutions may need additional investments in:

compliance technology,

trade monitoring,

employee surveillance,

and record keeping.

These measures create costs.

However, such expenses are part of operating within sophisticated international securities markets where strong surveillance and governance standards are increasingly expected.

Technology Will Become Important for Market Surveillance

The nature of modern securities markets makes technological surveillance increasingly important.

Potential market abuse can involve enormous quantities of:

orders,

trades,

messages,

account relationships,

and price movements.

Manual monitoring alone is often insufficient.

Regulators and market institutions increasingly rely on analytical systems capable of identifying:

unusual order patterns,

coordinated accounts,

rapid cancellations,

abnormal price movements,

and suspicious trading around material announcements.

IFSCA's explicit focus on artificial orders and manipulative trading makes sophisticated market-surveillance capabilities particularly relevant.

Conclusion

IFSCA's Prohibition of Market Abuse in Securities Markets Regulations, 2026 represent an important expansion of GIFT City's dedicated financial-market regulatory architecture.

The framework consolidates rules covering insider trading, fraudulent transactions, price and benchmark manipulation, circular trading, artificial demand, misleading information and other abusive market practices under IFSCA's direct supervision.

It also introduces significant compliance obligations for listed entities and designated persons, including a $25,000 quarterly trade-disclosure threshold, tighter controls over material non-public information and requirements for effective internal compliance systems.

Most importantly, the framework replaces the SEBI insider-trading and fraudulent-trading regimes previously applicable within the IFSC.

As GIFT City seeks to expand its role as an international financial hub, the ability to provide credible market surveillance, strong investor protection and predictable enforcement will be increasingly important.

The new regulations represent another step toward establishing GIFT IFSC as a distinct, institutionally mature and internationally competitive financial marketplace.