SEBI/HO/AFD/AFD -POD -3/P/CIR/2024/176

regulations · 1992 · State unknown

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Parent: THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 (7c4c1f5343adab106c3a94cafc08a5ecf5957ae7)

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CIRCULAR SEBI/HO/AFD/AFD -POD -3/P/CIR/2024/176 To, Foreign Portfolio Investors (“FPIs”) Designated Depository Participants (“DDPs”) and Custodians The Depositories The Stock Exchanges and Clearing Corporations Dear Sir / Madam, Subject: Measures to address regulatory arbitrage with respect to Offshore Derivative Instruments (ODIs) and FPIs with segregated portfolios vis-à-vis FPIs SEBI vide "Master Circular for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors" No. SEBI/HO/AFD/AFD-PoD2/P/CIR/P/2024/70 dated May 30, 2024, as amended from time to time (hereinafter referred to as the 'FPI Master Circular') has, inter alia, specified the requirements related to Offshore Derivative Instruments ("ODIs") by Foreign Portfolio Investors ("FPIs") and connected matters, under Part D of the FPI Master Circular. Further, requirements related to segregated portfolios are specified in Part A of the FPI Master Circular. It has been decided to modify certain requirements related to ODIs and FPIs with segregated portfolios . In view of the same, the FPI Master Circular stands modified as follows: 2.1.Sub -paras (i) to (iii) of Para 1 of Part D shall be modified as under: " 1 . Conditions for issuance of ODIs A Foreign Portfolio Investor shall issue ODIs only through a separate dedicated FPI registration with no proprietary investments. Such FPI registration shall be in the name of the FPI with "ODI" as suffix under the same PAN. Where such addition is being requested for an existing FPI, this addition of suffix will not be considered a change in name of FPI . DDP December 17, 2024 may process the request in such cases and issue a new FPI registration certificate. Provided the requirement of separate dedicated registration shall not apply for 

Rule TOC

2 · 1.Sub -paras (i) to (iii) of Para 1 of Part D shall be modified as under:

2 · 2.The following Para shall be inserted after Para 3 of Part D:

2 · 3.Sub -para (xiii)(b) of Para 1 of Part C and the Note below the same shall be modified as under:

2 · 4.Sub -para (xv) of Para 1 of Part C shall be modified as under:

2 · 5.Sub -para (xvii)(iii) of Para 1 of Part C shall be modified as under:

2 · 6.The following proviso shall be inserted after first proviso to sub-para (xiii)(a) of Para 1 of Part C:

2 · 7.The following proviso shall be inserted after sub-para (xxi) of Para 1 of Part C: "Provided further that in case of breach of criteria mentioned in sub -p -para (xiii)(a) by a segregated portfolio(s), the liquidation requirement, if applicable, shall apply only to such segregate portfolio(s)."

3 · 1.ODIs with derivatives as underlying/reference, issued and outstanding as on the date of this Circular, shall be permitted to be redeemed within a period of 1 year from the date of this Circular . However, no renewal of such ODIs shall be permitted.

3 · 2.ODIs with securities (other than derivatives) as underlying/reference and hedged with derivatives, issued and outstanding as on the date of this circular, shall be permitted to be redeemed or hedged with same securities as the underlying/reference on a one to one basis, within a period of 1 year from the date of this Circular .

3 · 3.ODI issuing FPIs that have ODIs outstanding as on the date of this Circular shall obtain separate dedicated registration, if required to do so, within a period of 1 year from the date of this Circular . Off -market transfer of assets/ positions will be allowed for FPIs intending to transfer assets/ position from one FPI account to another FPI account to comply with this requirement .