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    Sebi issues operational guidelines for FPIs

    Synopsis

    The regulator said that all existing FPIs registered as category III FPIs under the 2014 regulations shall be deemed to have been registered as Category II FPIs under the new regulations.

    Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday issued operational guidelines for foreign portfolio investors (FPI) regulations notified in September.

    The regulator said that all existing FPIs registered as category III FPIs under the 2014 regulations shall be deemed to have been registered as Category II FPIs under the new regulations.

    For the sake of clarity, there will be no deemed recategorization of registration for eligible entities from category III FPI registration under 2014 regulations to category I FPI under the regulations, and said all existing FPIs registered as category II FPIs under the 2014 regulations shall be deemed to have been registered either as category I FPI or category II FPI under the regulations.

    It further said FPIs shall not be allowed to issue offshore derivative instruments (ODIs) referencing derivatives.

    Further, no FPI shall be allowed to hedge their ODIs with derivative positions on stock exchanges in India, it said, adding that as an exception FPI under category I can do so through a separate FPI registration.

    Sebi said fresh derivative positions, which are not in compliance with the above requirements, will not be allowed, and FPIs will have 90 days’ time from the date of publication of the operating guidelines to comply with the requirements.

    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 such requirements, it said.

    An ODI subscriber who became ineligible under the regulation may continue to hold their existing positions till December 31, 2020, but no renewal/rollover of existing positions by such ODI subscribers shall be permitted and fresh issuance of ODIs shall be made only to eligible subscribers, it said.
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