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SEBI GUIDELINES FOR ISSUANCE OF ODI BY FOREIGN PORTFOLIO INVESTORS (FPIs)

Securities Exchange Board of India (SEBI) has issued the circular dated 7th July 2017 on the guidelines for issuance of ODIs, with derivative as underlying, by the ODI issuing FPIs. Now the FPIs are required to comply with the following conditions to issue ODI, along with the terms of SEBI (Foreign Portfolio Investors) Regulation, 2014 (FPI Regulations) and Circulars issued from time to time regarding ODI:

  1. The ODI issuing FPIs shall not be allowed to issue ODIs with derivative as underlying, with the exception of those derivative positions that are taken by the ODI issuing FPI for hedging the equity shares held by it, on a one to one basis.
  2. In the case of the existing ODIs which have been issued by the ODI issuing FPIs with derivatives as underlying, where the said underlying derivatives position are not for purpose of hedging the equity shares held by it, the ODI issuing FPI has to liquidate such ODIs latest by the date of maturity of the ODI instrument or by December 31, 2020, whichever is earlier. However, ODI issuing FPIs should endeavor to liquidate such ODI instruments prior to timeline.
  3. In the case of issuance of fresh ODIs with derivatives as underlying, a certificate has to be issued by the compliance officer (or equivalent) of the ODI issuing FPI, certifying that the derivatives position, on which the ODI is being issued, is only for hedging the equity shares held by it, on a one to one basis. The said certificate shall be submitted along with the monthly ODI reports.
  4. It is clarified that the term “hedging of equity shares” means taking a one- to- one position in only those derivatives which have the same underlying as the equity share.

E-FILING FOR FOREIGN VENTURE CAPITAL INVESTORS UNDER SEBI (FVCI) REGULATIONS, 2000

SEBI has introduced an online system for filings related to Foreign Venture Capital Investors (FVCI), to protect the interests of investors in securities and to promote and regulate the securities market. The e-filing system of applying for registration, reporting and various compliances under the provisions of FVCI Regulations, would facilitate ease of operations. All applicants desirous of seeking registration as a FVCI are now required to submit their applications online only through SEBI Intermediary Portal. However, all SEBI registered FVCIs are now required to file their compliance reports and submit applications for any request under the provisions of FVCI Regulations, through the online system only. The aforesaid online filing system for FVCI has been made operational from July 1, 2017.

NON RESIDENT INDIANS (NRIS) TO TRADE IN THE CURRENCY DERIVATIVES

Subject to terms and conditions mentioned in Reserve Bank of India (RBI) vide A.P. (DIR Series) Circular no. 30 dated February 02, 2017, NRIs are now permitted to trade in the currency derivatives segment of stock exchanges.

The position limits for NRIs in the permitted currency pairs shall be as given below:

PARTICULARS EXISTING PROVISIONS

USD-INR

Gross open position across all contracts shall not exceed 6% of the total open interest or USD 10 million, whichever is higher.

EUR-INR

Gross open position across all contracts shall not exceed 6% of the total open interest or EUR 5 million, whichever is higher.

GBP-INR

Gross open position across all contracts shall not exceed 6% of the total open interest or GBP 5 million, whichever is higher.

JPY-INR

Gross open position across all contracts shall not exceed 6% of the total open interest or JPY 200 million, whichever is higher.

13 July 2017
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