Sebi bars FPIs from issuing ODIs with derivatives as underlying
Portfolio Investors (FPIs) from issuing offshore derivative instruments (ODIs) with derivatives as underlying or use derivatives to hedge their ODIs in India.
«A Foreign Portfolio Investor shall not issue ODIs with derivatives as reference/underlying. A Foreign Portfolio Investor shall not hedge their ODIs with derivative positions on Stock Exchanges in India. Accordingly, ODIs shall only have securities (other than derivatives) as underlying and shall be fully hedged with the same securities on a one-to-one basis, throughout the tenure of the ODI,” a Sebi circular issued on Tuesday said.
Conditions for issuance of ODIs
A Foreign Portfolio Investor can issue ODIs only through a separate dedicated FPI registration with no proprietary investments. Such FPI registration will have to be in the name of the FPI with 'ODI' as a 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, the circular said, adding that Designated Depository Participants (DDPs) may process the request in these cases and issue a new FPI registration certificate.
The requirement of separate dedicated registration shall not apply for issuance of ODIs with Government securities as reference/underlying.
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