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The
Securities and Exchange Board of India has released its report on P-Notes, or
participatory notes suggesting that FIIs should not renew or issue PNs with as
derivatives. It also wants sub-accounts to not issue PNs. The regulator has asked
for comments on its paper by 20 October. From
a policy perspective, the SEBI move looks like a positive move, but it has come
too late reports CNBC-TV18. An important part is that every time the RBI and SEBI
have spoken about P-Notes, the finance ministry has come and said that they have
nothing against the P-Notes. Now
that the draft has come in, it seems that the finance ministry has changed its
stance on P-Notes and says that P-Notes are not the right entity through which
to enter India and further more, they have a put a 40 per cent cap on inflows
into India through P-Notes. The
FII positions in F&O are Rs73,000 crore. A lot of the positions are short
positions in that sense. The FIIs have roughly around Rs20,000 crore of positions
in the index. In stock futures, their positions are around Rs37,000 crore -Rs38,000
crore. SEBI
has given 18 months to the FIIs to unwind their positions.
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