IFSCA’s Market Abuse Regulations, 2026: A Comprehensive Framework for Securities Market Integrity in IFSC

The International Financial Services Centres Authority (IFSCA), the unified regulator for financial products, services, and institutions operating within India’s International Financial Services Centres (IFSCs), notified and published in the official gazette the International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026 (“Market Abuse Regulations”) on September 5, 2026. The Regulations establish a comprehensive framework to prevent and prohibit market abuse in the securities market within the IFSC, aiming to protect investors and ensure the integrity and orderly functioning of the securities market.¹

The Market Abuse Regulations replace the applicability of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 within the IFSC. It provides a unified regulatory framework governing insider trading and manipulative, fraudulent, and unfair trade practices in the securities market.² The Regulations also draw on the International Organization of Securities Commissions (IOSCO) principles, particularly Principles 10, 11, and 12, which emphasise the need for regulators to have comprehensive inspection, investigation, surveillance, and enforcement powers, supported by an effective and credible compliance framework.³

Insider, Material Non-Public Information (MNPI) and Market Abuse.

The Regulations define an “insider” as any person who is connected or who is in possession of, or has access to, material non-public information (MNPI).⁴ MNPI, also referred to as unpublished price-sensitive information, means information relating to an entity or its securities that is not generally available to the public and which, upon becoming generally available, is likely to materially affect the price of its securities. Such information includes, inter alia, financial results, dividends, changes in capital structure, mergers and acquisitions, changes in key managerial personnel, credit ratings, proposed fundraising, agreements, defaults or fraud, insolvency proceedings, forensic audits, regulatory or judicial actions, litigation outcomes, guarantees, and changes in licences or regulatory approvals.⁵

The Regulations define “market abuse” as unlawful behaviour in the securities market, including, but not limited to, insider trading and manipulative, fraudulent, and unfair trade practices.⁶ The definition therefore adopts a broad approach, encompassing both trading based on non-public information and conduct that seeks to manipulate market prices, mislead investors, or otherwise undermine the fairness and integrity of the securities market.

Prohibition of Insider Trading and Disclosure Obligations

The Regulations prohibit insiders from communicating, providing access to, or procuring material non-public information (MNPI), except where such disclosure is made for a legitimate purpose, in the performance of duties, or for the discharge of legal obligations.⁷ Further, any person is prohibited from obtaining or inducing the communication of material non-public information from an insider, except for legitimate purposes, performance of duties, or compliance with legal obligations.⁸ The Regulations clarify that “legitimate purpose” includes sharing MNPI in the ordinary course of business with partners, collaborators, lenders, customers, suppliers, lead managers, underwriters, legal advisers, auditors, insolvency professionals, and other advisers or consultants, provided that such disclosure is not intended to circumvent the Regulations.⁹ Further, an insider is prohibited from trading, or causing another person to trade, in securities of a listed or proposed-to-be-listed entity while in possession of MNPI. Any trade undertaken while in possession of MNPI is presumed to have been executed based on such information. However, this presumption may be rebutted in specified circumstances, including transactions undertaken pursuant to statutory or regulatory obligations, bona fide transfers between insiders possessing the same MNPI, exercise of pre-determined stock options, and trades executed pursuant to a trading plan disclosed in accordance with the Regulations.¹⁰

The Regulations further require every listed entity to maintain a disclosure policy for designated persons.¹¹ “Designated persons” include controlling shareholders and directors of a listed entity, as well as such other persons as may be designated by the listed entity in accordance with the Regulations.¹² Designated persons must disclose acquisitions or disposals of specified securities by themselves or their immediate relatives within two trading days where the aggregate traded value during a calendar quarter exceeds USD 25,000, or such other threshold as may be prescribed. Upon receiving such disclosure, the listed entity is required to notify the recognised stock exchange(s) and publish the disclosure on its website within two working days. These disclosure requirements seek to enhance transparency and enable effective monitoring of trading activity by persons who may have access to sensitive information.

Prohibition of Certain Dealings in Securities.

Regulation 7 establishes a broad prohibition against fraudulent and deceptive conduct in relation to listed or proposed-to-be-listed securities. It prohibits any person from directly or indirectly fraudulently dealing in securities, employing any manipulative or deceptive device, using any scheme or artifice to defraud in connection with the issue or dealing of securities, or engaging in any act, practice or course of business that operates, or is likely to operate, as a fraud or deceit upon any person.¹³ The provision therefore covers both direct fraudulent transactions and indirect or sophisticated schemes designed to mislead investors or distort the integrity of the securities market. Further, Regulation 8 also identifies a wide range of specific conduct that may constitute manipulative, fraudulent or unfair trade practices.¹⁴ The list of conduct provided under Regulation 8 is not exhaustive, and conduct may still be prohibited under Regulation 7 even if it is not expressly included among the specific examples in Regulation 8.

Institutional Controls and Regulatory Enforcement. 

The Regulations require every entity to maintain an adequate and effective internal control system and a code of conduct to ensure compliance and prevent market abuse. The controls must ensure the identification and confidentiality of MNPI, restrict its procurement and communication, identify employees with access to MNPI, and undergo periodic review for effectiveness. IFSCA may also prescribe additional standards for internal controls and the code of conduct. Under the Regulations, IFSCA is authorised to take regulatory action against a person regulated by it for violating the Regulations, without prejudice to any other action available under the Act or other regulations. Where such action is considered necessary in the interest of investors and the securities market, IFSCA, by a reasoned written order, may issue a warning or censure, or suspend or cancel the person’s registration. 

The Market Abuse Regulations establish a comprehensive framework for maintaining the integrity and orderly functioning of securities markets in the IFSC by addressing insider trading, misuse of MNPI, and manipulative, fraudulent and unfair trade practices. By combining restrictions on market abuse with internal control requirements, disclosure obligations, and regulatory enforcement powers, the Regulations seek to strengthen investor protection and promote greater transparency and confidence in the IFSC securities market.

Citations

1. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 2. ↩︎
2. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 15. ↩︎
3. International Financial Services Centres Authority, “IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026,” Press Release, September 8, 2026 ↩︎
4. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 3(h). ↩︎
5. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 3(l). ↩︎
6. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 3(k).  ↩︎
7. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 4(1) ↩︎
8. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 4(2) ↩︎
9. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 4, Explanation. ↩︎
10. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 5. ↩︎
11. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 6. ↩︎
12. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 3(e). ↩︎
13. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 7. ↩︎
14. International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, reg. 8. ↩︎

Expositor(s): Adv. Siddharath Shrivastava