IFSCA Circular on Annual Compliance Audit for Capital Market Intermediaries in IFSC: Complete Framework and Reporting Norms

Overview

The International Financial Services Centres Authority (IFSCA) has released a landmark circular dated June 5, 2026, establishing a comprehensive and standardized framework governing the Annual Compliance Audit obligations of Capital Market Intermediaries (CMIs) operating within International Financial Services Centres (IFSCs). This regulatory development introduces structured reporting formats, prescribes auditor qualifications and independence norms, and places clearly defined responsibilities on both CMIs and Market Infrastructure Institutions (MIIs).

The circular derives its authority from Sections 12 and 13 of the International Financial Services Centres Authority Act, 2019, read alongside Regulations 25, 27, and 45 of the International Financial Services Centres Authority (Capital Market Intermediaries) Regulations, 2025 (hereinafter referred to as "CMI Regulations"), as well as Regulation 64 and Regulation 67 of the International Financial Services Centres Authority (Market Infrastructure Intermediaries) Regulations, 2021.

Regulatory Foundation: Key Provisions Under CMI Regulations

The circular draws from two pivotal regulatory provisions:

  • Regulation 25 of the CMI Regulations — This provision mandates that every CMI must conduct an annual compliance audit with respect to its adherence to the CMI Regulations, and must forward a copy of such audit report to IFSCA.

  • Regulation 27 of the CMI Regulations — This provision governs the obligations applicable to CMIs, particularly Broker Dealers who intend to deal in securities across foreign jurisdictions, requiring them to comply with the norms and standards prescribed by the Authority.

These foundational provisions form the backbone of the reporting architecture now being formalized through the June 2026 circular.

Annual Compliance Audit Report (ACAR) and Checklist (ACAC): Format and Submission Requirements

Prescribed Documents

IFSCA has specified two core compliance documents for CMIs:

  1. Annual Compliance Audit Report (ACAR) — The prescribed format is annexed to the circular itself.
  2. Annual Compliance Audit Checklist (ACAC) — Available for download on the IFSCA website at https://ifsca.gov.in/Download.

Submission Deadline and Mode

All categories of CMIs are required to submit both the ACAR and the ACAC to IFSCA on or before September 30 of each year, covering the immediately preceding Financial Year.

Submissions must be made via email to cmi-3upervision@ifsca.gov.in in the format prescribed by the Authority.

Important Clarification: The ACAC along with ACAR for Financial Year 2025-26 shall also be submitted by CMIs in conformity with the directions contained in this circular.

Structure of the Annual Compliance Audit Checklist (ACAC)

The ACAC has been designed in a multi-part format to capture both general and category-specific compliance obligations: