Sebi eases access norms for FPIs, tightens rules for offshore derivative

Market regulator Securities and Exchange Board of India (Sebi) proposes to further ease the access norms for investments by FPIs in Indian securities market by expanding the eligible list of jurisdictions for grant of FPI registration to Category I FPIs by including countries having diplomatic tie-ups with India.

Sebi also decided to levy a `Regulatory Fee' of $1,000 on each ODI subscriber, to be collected and deposited by the ODI issuing FPI of such ODI subscriber, once every three years, starting from 1 April 2017. SEBI said it would amend SEBI (FPI) Regulations, 2014 to implement the decision.

The board has decided to prohibit ODIs from being issued against derivatives, except on those which are used for hedging purposes. Sebi will issue a circular in this regard.

Some of the proposed changes include simplification of broad based requirements, rationalization of fit and proper criteria, permitting FPIs operating under the multiple investment managers (MIM) structure and holding FVCI registration to appoint multiple custodians.

Accordingly, the board considered and approved the proposal for initiation of public consultation process before implementing the aforesaid proposed changes to SEBI (Foreign Portfolio Investors) Regulations, 2014 and necessary circular/guidelines etc. issued thereunder.

The Sebi meeting also saw the presentation of a paper on `Growth and Development of Equity Derivatives Market in India'.

The Sebi meeting also decided to have stakeholder consultation on the need to review the derivatives market framework, including product suitability for investors so as to further strengthen the framework in line with the emerging trends and global best practices.

FPI regime, which commenced on 1 June 2014, has been put in place with the objectives of rationalising various foreign portfolio investment routes, simplify the procedures to attract more foreign funds.