Insider Trading and Market Manipulation in GIFT IFSC: The IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026

Until 2026, market conduct in GIFT IFSC was policed through the Indian securities framework applied in the IFSC. That changed on 1 September 2026, when the IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026 were published in the Gazette. They create a self-contained insider trading and market manipulation regime for the IFSC and, in the same instrument, disapply the two Indian regulations that previously did that work.

The Disapplication is The Headline

Regulation 15(1) provides that, from the commencement of the 2026 Regulations, the SEBI (Prohibition of Insider Trading) Regulations, 2015 and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 shall not apply in the International Financial Services Centre. Regulation 15(2) preserves anything done under those regulations before commencement, deeming it done under the corresponding provisions of the new regime.

For issuers and intermediaries with both Indian and IFSC operations, this means two rulebooks with overlapping but not identical content. Group-wide insider trading codes drafted solely against the SEBI PIT Regulations will not, without adaptation, state the obligations that apply in the IFSC.

The regulations were notified on 25 August 2026 under section 28 read with sections 12 and 13 of the IFSCA Act, 2019, and sections 11(2)(e) and (g) and 12A(a) to (e) of the SEBI Act, 1992.

Who is an Insider?

An “insider” is a person who is a connected person, or who is in possession of, or has access to, material non-public information.

A “connected person” is a person who is, or has been during the six months prior to the concerned act, associated with an entity, directly or indirectly, in any capacity, including by frequent communication with its officers; a contractual, fiduciary or employment relationship; being a director, officer or employee; or holding any position, including a professional or business relationship, temporary or permanent, that allows or is reasonably expected to allow access to material non-public information.

“Material non-public information”, also called unpublished price sensitive information, is information relating to an entity or its securities that is not generally available and which, on becoming generally available on a non-discriminatory basis, is likely to materially impact the price of the entity’s securities. The regulation gives a non-exhaustive list beginning with financial results and dividends.

The Two Prohibitions

Communication and procurement (regulation 4). An insider may not communicate, provide or allow access to material non-public information relating to an entity or to securities listed or proposed to be listed, to any person including other insiders, except where the communication is in furtherance of legitimate purposes, performance of duties or discharge of legal obligations. The explanation gives content to that phrase: sharing in the ordinary course of business with partners, collaborators, lenders, customers, suppliers, lead managers, underwriters, legal advisers, auditors, insolvency professionals or other advisers or consultants, so long as it is not done to evade the regulations. No person may procure, or cause an insider to communicate, such information outside those exceptions. Significantly, a recipient of such information for legitimate purposes is themselves treated as an insider and must handle the information accordingly.

Trading (regulation 5). An insider may not trade, or cause another person to trade, in listed or to-be-listed securities while in possession of material non-public information. Where a person has traded while in possession, it is presumed that the trades were executed on the basis of that information.

The regulation then lists circumstances by which a person may explain their trading:

• an off-market inter-se transfer between insiders possessing the same information, without breach of regulation 4, where both parties made a conscious and informed decision;
• a transaction through the block deal window of a recognised stock exchange on the same basis;
• a bona fide transaction carried out pursuant to a statutory or regulatory obligation;
• exercise of stock options where the exercise price was pre-determined in compliance with applicable laws;
• for non-individual insiders, a demonstration that the individuals possessing the information were different from those taking the trading decision, that the decision-makers were not in possession, and that adequate arrangements (information barriers) were in place and not breached; and
• trades pursuant to an irrevocable trading plan disclosed to the recognised stock exchange at least 120 days in advance.

The 120-day trading plan is notably longer than some comparable regimes, and it must be irrevocable, which should be considered before adoption.

Disclosure by Designated Persons

A “designated person” means the controlling shareholders and directors of a listed entity, and such other persons as the listed entity categorises as designated persons.

Every listed entity must have a policy for disclosures by designated persons. A designated person must disclose to the listed entity the number of specified securities acquired or disposed of by them or their immediate relatives, within two trading days, where the value traded in one transaction or a series over any calendar quarter exceeds USD 25,000, or such other value as IFSCA specifies. “Specified securities” include equity instruments, debt securities and any other derivative instruments of the listed entity; “equity instruments” means equity shares, convertible debentures, preference shares and share warrants.

The listed entity must, within two working days of receipt, notify the recognised stock exchange where its securities are listed and host the disclosure on its website.

Manipulative, Fraudulent and Unfair Practices

Regulation 7 prohibits any person from dealing in securities in a fraudulent manner, using a manipulative or deceptive device, employing a scheme or artifice to defraud, or engaging in any act or course of business operating as a fraud or deceit in connection with dealing in or issuing securities listed or proposed to be listed.

Regulation 8 supplements this with a deeming list of conduct treated as manipulative, fraudulent or unfair. It covers familiar ground, including creating a false or misleading appearance of trading, wash-type transactions not intended to transfer beneficial ownership, inducements to secure minimum subscription, price manipulation including of reference or benchmark prices, publishing untrue information on results or transactions, dealing in stolen or counterfeit securities, creating artificial demand, matched trades at the same price to inflate activity, dissemination of rumours, repeated order entry and cancellation without intent to execute, diversion or siphoning of an entity’s assets or earnings, manipulation of books or financial statements, illegal mobilisation of funds through collective investment schemes, and mis-selling.

“Mis-selling” is defined to include knowingly making a false or misleading statement, knowingly concealing or omitting material facts, knowingly concealing associated risk, or not taking reasonable care to ensure suitability of the securities or service to the buyer. The last limb is a negligence-based standard, and it sits within a market abuse regulation rather than only in conduct-of-business rules.

An explanation makes clear that the list is not exhaustive and that conduct falling within regulation 7 is prohibited even if not listed.

The definition of “fraud” is correspondingly broad, covering misrepresentation, active concealment, a promise made without intention to perform, reckless statements, deceptive behaviour depriving another of informed consent, and an issuer’s misinformation affecting market price even where investors did not rely on the statement itself. A good-faith explanation excludes general comments on government economic policy, a country’s economic situation, market trends or like matters, whether made publicly or privately.

Compliance Infrastructure and Consequences

Institutional mechanism (regulation 9). Every listed entity must put in place adequate and effective internal controls and a code of conduct to prevent market abuse. The controls must provide for identifying and maintaining confidentiality of material non-public information, restricting its procurement and communication, identifying employees with access, and periodic review of effectiveness. IFSCA may specify additional standards.

Sanctions. Contraventions are dealt with under the corresponding provisions of the IFSCA Act, which draws in the SEBI Act machinery (Article 4). Separately, IFSCA may issue a warning or censure, or suspend or cancel the registration of a regulated person, by a reasoned order in the interests of investors and the securities market.

Relaxation. IFSCA may relax strict enforcement of any requirement, for recorded reasons, in the interest of market development, on application with a non-refundable fee, and must process such applications within 60 days of a complete application.

What Issuers and Intermediaries Should Do Now

• Write an IFSC-specific code. The SEBI PIT and PFUTP Regulations no longer apply in the IFSC, and the new regime’s definitions differ.
• Re-set the disclosure plumbing for the USD 25,000 quarterly threshold, two trading days for designated persons, and two working days for the entity’s exchange filing and website posting.
• Review information barriers. The non-individual defence in regulation 5(3)(e) depends on demonstrable arrangements, not assertions.
• Reconsider trading plans, given the 120-day advance disclosure and irrevocability.
• Bring distribution and sales conduct into scope, because mis-selling, including a failure to take reasonable care on suitability, is now a deemed unfair trade practice.

Frequently Asked Questions

1. What are the IFSCA Market Abuse Regulations, 2026?

They establish a dedicated framework to prevent insider trading, market manipulation, fraudulent practices and other forms of market abuse in GIFT IFSC.

2. Do SEBI’s PIT and PFUTP Regulations apply in GIFT IFSC?

No. Regulation 15 disapplies the SEBI (Prohibition of Insider Trading) Regulations, 2015 and the SEBI (PFUTP) Regulations, 2003 in the IFSC.

3. Who is considered an insider under the 2026 Regulations?

An insider is a connected person or anyone possessing, or having access to, material non-public information.

4. What is the disclosure threshold for designated persons?

Disclosure is required within two trading days when specified securities transactions exceed USD 25,000 in a single transaction or a series of transactions during a calendar quarter.

5. What compliance measures must listed entities implement?

Listed entities must establish effective internal controls and a code of conduct to protect material non-public information and prevent market abuse.