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TMI BlogMeasures to address regulatory arbitrage with respect to Offshore Derivative Instruments (ODIs) and FPIs with segregated portfolios vis-à-vis FPIsX X X X Extracts X X X X X X X X Extracts X X X X ..... A of the FPI Master Circular . 2. 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 i. 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 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 issuance of ODIs with Government securities as reference/underlying. ii. A Foreign Portfolio Investor shall not issue ODIs with derivatives as reference/underlying. iii. 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I. iii. ODI subscribers satisfying any of the criteria listed below shall not be required to make the disclosures as specified in Para (i) above: a) Government and Government related investors registered as FPIs under Regulation 5 (a) (i) of the FPI Regulations. b) Public Retail Funds ( PRFs ) as defined under Regulation 22(4) of the FPI Regulations, subject to independent validation of the same by ODI issuing FPIs. c) Exchange Traded Funds (with less than 50% exposure to India and India-related equity securities) and entities listed on specified Exchanges of the permissible jurisdictions as may be notified by the Board from time to time. To start with, the list of permissible jurisdictions and exchanges as mentioned in Annexure A to SEBI circular SEBI/HO/MRD2/DCAP/CIR/P/2019/146 dated Nov 28, 2019 shall be considered as permissible exchanges and jurisdictions for this clause. d) Pooled investment vehicles registered with/ regulated by a Government/ regulatory authority in their home jurisdiction/ country of incorporation/ establishment/ formation, where: I. their positions in equity ODIs referenced to securities of a single Indian corporate group is below 25% of their overall glob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Para (i) above, subject to compliance with all of the following conditions: a) The apex company of such corporate group has no identified promoter. For this purpose, the list of corporate groups based on the corporate repository published by the Stock Exchanges and their respective apex companies having no identified promoters has been made public by Depositories. b) The ODI subscriber does not have more than 50% of its equity ODI positions in ODIs referenced to securities of a single Indian corporate group, after disregarding its positions in ODIs referenced to securities of the apex company (with no identified promoter). c) The composite positions of all such ODI subscribers (that meet the 50% concentration criteria excluding ODI subscribers which are either exempted or have disclosed) and all FPIs that meet the 50% concentration criteria in that corporate group, excluding FPIs which are either exempted or have disclosed, in the apex company is less than 3% of the total equity share capital of the apex company. Note: ODI positions of ODI subscribers and holdings of ODI issuing FPIs corresponding to the same underlying/reference shares may be counted only once so as to avoid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... piry of timelines mentioned in Para (ix) within 30 trading days from the expiry of such timelines. ODI issuing FPIs shall submit the disclosures made by ODI subscribers to Depositories within 5 trading days from the date of such disclosure made by such ODI subscribers. Non-disclosure by ODI subscriber in this regard shall render the ODI subscriber ineligible to subscribe/hold any ODI positions through any ODI issuing FPI. ODI issuing FPIs shall redeem all ODI positions held by such ODI subscriber(s) within 180 calendar days from the date of such ineligibility. A list of such ODI subscribers shall be made public by the Depositories and ODI issuing FPIs shall ensure that no ODIs are issued to these entities. xii. ODI issuing FPI shall ensure that the details collected from ODI subscribers as specified in Para (i) are updated and informed to the Depositories within 30 days of any change in such details. xiii. For monitoring compliance with the 50% exposure limit in equity ODIs referenced to securities of a single corporate group, a repository of Indian corporate groups is publicly disseminated on the websites of Stock Exchanges/ Depositories. xiv. The Depositories shall put in place a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in Para (xiii)(b) above, shall be exempted from making the additional disclosures if any constituent of investor group and ODI subscriber(s), referred to in Para (xiii)(b) above, qualifies for exemption and the net equity AUM/positions of the remaining constituents of the investor group ODI subscribers, after deducting the AUM/positions of such exempted FPIs/ODI subscribers, falls below INR 25,000 crore. After making the aforesaid deductions of AUM/positions of such exempted FPIs/ODI subscribers, in case the equity AUM/positions of the remaining FPIs of the investor group and the remaining ODI subscribers continues to exceed INR 25,000 crore, only the non-exempted FPIs of the investor group shall be liable for making the disclosures in terms of Para xiii and consequent actions, if any, as stated in the section below. 2.5. Sub-para (xvii)(iii) of Para 1 of Part C shall be modified as under: iii. The composite holdings of all such FPIs (that meet the 50% concentration criteria excluding FPIs which are either exempted or have disclosed) and all ODI subscribers that meet the 50% concentration criteria in that corporate group, excluding ODI subscribers which are either exempted or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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