FII investment in MCX meets trigger limit, says RBI

FIIs had 38.4% equity shareholding in MCX in the qaurter ended June 2013

The Reserve Bank today said the foreign institutional investors (FIIs) investment in Multi Commodity Exchange has reached the trigger limit under portfolio investment scheme and purchase of further equity shares of company will require its approval.

"The aggregate net purchases of equity shares in Multi Commodity Exchange of India Limited by Foreign Institutional Investors (FIIs) in the primary/secondary markets under Portfolio Investment Scheme (PIS) have reached the trigger limit," RBI said in a notification.

Hence, further purchases of equity shares of this company would be allowed only after obtaining prior approval of the Reserve Bank of India, it added.

RBI did not provide the trigger limit up to which FIIs can purchase equity shares in MCX.

Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) are allowed to invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS).

Under the scheme, FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in India.

As of quarter ended June 2013, FIIs had 38.40% equity shareholding in MCX, as per data available on the BSE website.

RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis. For effective monitoring of foreign investment ceiling limits, it has fixed cut-off points that are two percentage points lower than the actual ceilings.

Once the aggregate net purchases of equity shares of the company by FIIs/NRIs/PIOs reach the cut-off point, it cautions banks not to purchase any more equity shares of the respective company on behalf of FIIs/NRIs/PIOs without its prior approval.