Thursday June 30 2016

News Source: Global Disclosures

Focus: Foreign Investment

Type: General

Country: India




On 29th June 2016, SEBI published the following clarification regarding grandfathering of Offshore Derivative Instruments (ODI) issuers and modification of replies of FAQ 70 and FAQ 71 of SEBI FAQs to SEBI (FPI) Regulations 2014. In terms of the SEBI (Foreign Portfolio Investors) Regulation, 2014 (FPI Regulations)and circulars issued from time to time regarding ODI, the Foreign Portfolio Investors (FPIs) issuing ODIs are required to comply with the clarifications to the following queries raised by them:

(1) ODIs have been issued to unregulated funds under the FII Regulations. Can these ODI positions continue under the FPI regime? Can existing ODI subscribers continue to subscribe to ODIs?

Clarification: The ODI subscribers who have subscribed to ODIs under FII Regulations can continue to subscribe to ODIs under the FPI regime, subject to the condition that they comply with Regulation 22 of SEBI FPI Regulations, 2014 and meet the eligibility criteria as laid down in the SEBI circular CIR/IMD/FIIC/20/2014 dated November 24, 2014 along with other norms which may be notified by SEBI from time to time. Those ODI subscribers which do not meet the aforementioned norms, including unregulated funds whose investment manager is appropriately regulated, can continue to hold the position until the date of expiry of such positions or until December 31, 2020, whichever is earlier. Such subscribers cannot take fresh positions or renew the old positions.

(2) Whether an ODI issuer can issue ODIs to existing entities, which were registered as clients but did not have positions as on January 07, 2014?

Clarification: Fresh ODIs can be issued to those entities which comply with SEBI circular CIR/IMD/FIIC/20/2014 dated November 24, 2014 along with other conditions that may be notified by SEBI from time to time read along with Regulation 22 of SEBI FPI Regulations, 2014.

The circular will become effective as of 1st August 2016.

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