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CS Professional · Strategic Management and Corporate Finance · An Overview on Listing and Issuance of Securities in International Financial Services Centre

A GIFT City unit underwrites the subscription of a bond issue for a client. Under the IFSCA Act, 2019, this activity is best classified as:

Underwriting a bond issue is a financial service, because the Act's definition of financial service expressly includes underwriting the issuance or subscription of a financial product. The bond itself is the financial product, a security. It is not a deposit and is covered by the Act.

  1. AA financial service, because underwriting the issuance or subscription of a financial product is listed in the definitionCorrect
  2. BA financial product, because it is a deposit
  3. COutside the Act, because only buying and selling is covered
  4. DA function of the Authority rather than a unit

Explanation

The definition of financial service includes underwriting the issuance or subscription of a financial product. The bond is the financial product (a security), while underwriting is the service. Hence it is not a deposit, and it is not excluded merely because it is not buying or selling.

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