SEBI move positive from policy perspective
17 October 2007The 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.
has given 18 months to the FIIs to unwind their positions.