Notification No. IFSCA/GN/2025/007, Dated 24.07.2025
IFSC Authority Introduces Third-Party Fund Management Framework
The International Financial Services Centres (IFSC) Authority has amended the Fund Management Regulations, 2025, to create a structured regulatory framework for Third-Party Fund Management Services. This significant development aims to expand the scope of fund management activities within IFSCs, allowing for greater flexibility and participation by qualified entities. It reflects the Authority’s commitment to evolving its regulatory regime in line with global best practices.
Registered FMEs Can Manage Schemes on Behalf of Others
Under the new framework, a registered Fund Management Entity (FME) is now permitted to manage investment schemes on behalf of third parties, subject to obtaining prior authorisation from the Authority. This move opens up new avenues for fund managers to operate as service providers for other investment entities, fostering a more dynamic and diverse financial ecosystem in the IFSC.
Eligibility and Regulatory Requirements for FMEs
To participate in third-party fund management, an FME must be established in the IFSC as a company, LLP, or any other form as permitted by the Authority. Additionally, the entity must fulfill specific eligibility criteria, including compliance with operational guidelines, governance norms, and risk management protocols. These measures ensure that only credible and capable entities are entrusted with managing third-party funds.
Minimum Net Worth and Compliance Obligations
The framework also stipulates a minimum net worth requirement for FMEs wishing to offer third-party fund management services, ensuring financial stability and capacity. Entities must also adhere to ongoing compliance obligations, including regular reporting, audit requirements, and adherence to anti-money laundering (AML) and Know Your Customer (KYC) norms. These provisions are designed to safeguard investor interests and maintain the integrity of the financial system within the IFSC.
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