IFSCA - Regulations, Listing and Compliances · Capital Market Intermediaries

IFSCA Intermediaries: General Obligations and Code of Conduct

Updated 11 October 2026 · Fact-checked

General obligations are the standing duties every IFSCA-registered capital market intermediary must follow after registration. They cover a compliance officer, KYC and anti-money laundering checks, fair client dealing, record keeping, grievance redressal and a code of conduct. In an exam, state the duty, apply it to the facts, then conclude.

Understand General Obligations and Code of Conduct

An intermediary in the IFSC (a broker, depository participant, custodian, investment banker and similar) holds client money, securities and information. Registration gives it permission to operate. General obligations are the conditions that keep that permission safe.

Think of them in five blocks. Governance: a named compliance officer who monitors rules and reports breaches. Know your client: identify the client, verify identity and beneficial ownership, and screen against money laundering and terrorist financing risks. Conduct: deal honestly, fairly, with due skill and care, avoid conflicts of interest, and put client interest first. Records: keep client, transaction and compliance records for the period the regulations prescribe, and produce them to IFSCA on request. Redress: have a mechanism to receive and resolve client complaints within set timelines.

The code of conduct is the ethical layer. It requires integrity, fair dealing, proper disclosure of fees and risks, confidentiality of client information, no market manipulation or insider dealing, and cooperation with the regulator. A breach can attract inspection, penalty, suspension or cancellation of registration.

For the exam, the exact periods, thresholds and forms come from the IFSCA (Capital Market Intermediaries) Regulations and related circulars. Use the text of the regulations given to you. Do not rely on memory for numbers you are unsure of. Anchor your answer on the principle and cite the regulation provision you are given.

IFSC intermediaries also follow the Prevention of Money-laundering Act framework as applied in the IFSC and IFSCA's AML/CFT guidelines. Treat KYC and AML as continuing duties, not one-time onboarding tasks.

Key rules to remember

Compliance officer duty: Monitor compliance → report non-compliance → coordinate with IFSCA; The compliance officer must be appointed and must report breaches to the regulator and management. Check the regulations for qualification and reporting details.
KYC and AML cycle: Identify → Verify → Beneficial owner → Risk-rate → Monitor → Report suspicious transactions; Ongoing monitoring is required, not only onboarding. Report suspicious transactions as per the AML/CFT framework.
Client dealing principle: Integrity + Fair dealing + Due skill and care + Disclosure + Confidentiality + Conflict management; Use these as headings for any code of conduct answer.
Records rule: Maintain records for the prescribed period → make available to IFSCA on request; State the exact retention period only from the regulation text supplied to you.
Grievance redressal: Receive → Record → Resolve within timeline → Report/escalate; Intermediary must have a mechanism and keep records of complaints and outcomes.

How to solve General Obligations and Code of Conduct questions

Use the same frame for any case-based question: provision, analysis of the facts, conclusion, with a practical compliance point.

1Read the facts and identify which obligation is in issue: compliance officer, KYC or AML, client dealing, records, grievance or code of conduct.
2Name the intermediary type and confirm it is IFSCA-registered, so the Capital Market Intermediaries Regulations apply.
3State the rule in plain words, citing the regulation or code of conduct clause if you are certain of it.
4Apply the rule to each fact. Note what the intermediary did and what it failed to do.
5Check for related duties, such as a conflict of interest, a missed suspicious transaction report or a missing record.
6Conclude: is there a breach, and what are the consequences (inspection, penalty, suspension, cancellation)?
7Add the practical step: appoint or replace the officer, update KYC, preserve records, file the report or fix the grievance system.

Quickest way: Five-block checklist

When to use it: Use when you have limited time or the question asks you to list or discuss the obligations generally.

Write five headings: Compliance officer, KYC/AML, Client dealing, Records, Grievances.
Add one line of rule under each heading.
Add the code of conduct principles in one line: integrity, fairness, care, disclosure, confidentiality.
Close with consequences of breach: inspection, penalty, suspension or cancellation.
If facts are given, tie one fact to each heading you use.

Common mistakes in General Obligations and Code of Conduct

Treating KYC as a one-time onboarding step
Students link KYC only with account opening.
Fix: Say that due diligence, risk rating and transaction monitoring continue through the relationship, with updates and suspicious transaction reporting.
Giving exact retention periods or timelines from memory
Students try to sound precise and mix up different regimes.
Fix: State the principle and use the period only if the regulation text is in front of you. Otherwise say 'for the period prescribed in the regulations'.
Confusing the compliance officer with a director or the principal officer under a different regime
Several roles appear in compliance chapters.
Fix: Define the compliance officer by function: monitors compliance and reports to management and IFSCA. Keep the role separate from the board.
Listing the code of conduct without applying it to facts
Memorised lists feel safe.
Fix: Pick the principles that match the facts, such as conflict of interest or misuse of client information, and show how each was breached.
Ignoring consequences of breach
Students stop after finding the violation.
Fix: Always conclude with the regulator's possible actions and a corrective compliance step.
Mixing IFSCA rules with SEBI rules for domestic intermediaries
The frameworks look similar.
Fix: Anchor the answer in IFSCA regulations for entities in the IFSC and mention SEBI only if the question does.

Worked examples

Example 1

Arjun Securities IFSC Pvt Ltd, an IFSCA-registered broker, opened accounts for several clients without verifying beneficial ownership of corporate clients. It also did not appoint a compliance officer for six months. Advise on the breaches.

Show the solution

Provision: a registered intermediary must carry out KYC including identifying beneficial owners, and must have a compliance officer who monitors compliance and reports to IFSCA and management.
Fact 1: beneficial ownership of corporate clients was not verified. This breaches the KYC and AML due diligence duty and exposes the firm to money laundering risk.
Fact 2: no compliance officer for six months. This is a failure of the governance obligation, so there was no internal check on compliance.
Link: the missing officer likely allowed the KYC lapse to continue undetected.
Conclusion: the firm is in breach of its general obligations. IFSCA may inspect and impose penalty, and may suspend or cancel registration depending on gravity.
Practical step: appoint a qualified compliance officer at once, re-verify beneficial owners, risk-rate clients, review past transactions for suspicious activity and file reports where needed.

Answer: Arjun Securities breached the KYC/AML duty and the compliance officer requirement. It faces inspection and penalty or other action by IFSCA, and should appoint the officer and remediate KYC immediately.

Example 2

Meera Capital, an IFSC intermediary, receives a client complaint about unexplained charges. It ignores the complaint and later deletes the client's transaction records to avoid scrutiny. Discuss under the code of conduct and general obligations.

Show the solution

Provision: the intermediary must have a grievance redressal mechanism and resolve complaints in the time prescribed.
Provision: it must maintain client and transaction records for the prescribed period and produce them to IFSCA on request.
Provision: the code of conduct requires integrity, fair dealing, and proper disclosure of charges.
Fact 1: ignoring the complaint breaches the grievance duty and fair dealing.
Fact 2: unexplained charges suggest weak disclosure of fees.
Fact 3: deleting records breaches the record-keeping duty and shows lack of integrity, which is a serious aggravating factor.
Conclusion: multiple breaches; IFSCA may order inspection, impose penalty and consider suspension or cancellation of registration.
Practical step: restore records if possible, resolve and document the complaint, refund improper charges and strengthen disclosure and record controls.

Answer: Meera Capital breached grievance redressal, record maintenance, disclosure and integrity duties. Destroying records is the most serious point and can lead to penalty or loss of registration.

Exam tips

Use a fixed frame: rule, application, conclusion, practical step. Examiners reward structure.
Quote numbers and timelines only from the regulation text supplied. Otherwise say 'as prescribed'.
In KYC and AML questions, mention beneficial ownership, risk rating, ongoing monitoring and suspicious transaction reporting.
Always end with consequences and a corrective compliance action.
In short-note questions on the code of conduct, group principles under integrity, client interest, disclosure and confidentiality, and market conduct.

Practice questions from Capital Market Intermediaries

General Obligations and Code of Conduct in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

General Obligations and Code of Conduct: frequently asked questions

What are the general obligations of IFSCA capital market intermediaries?

They include appointing a compliance officer, doing KYC and AML due diligence, dealing fairly with clients, maintaining records, redressing grievances and following the code of conduct. These apply continuously after registration.

What does the compliance officer do?

The compliance officer monitors the intermediary's compliance with the regulations and internal policies. The officer reports non-compliance to management and to IFSCA and coordinates with the regulator.

Is KYC only needed when a client is onboarded?

No. KYC is the starting point of a continuing process that includes risk rating, monitoring of transactions and updating of client information. Suspicious transactions must be reported as required under the AML/CFT framework.

What happens if an intermediary breaches the code of conduct?

IFSCA can inspect the entity and take enforcement action. This can include penalty, directions, suspension or cancellation of registration depending on the seriousness of the breach.