FIIs must stop acting on behalf of few individuals: Bhave

Capital market watchdog Sebi today said foreign institutional investors have to, by October one, end the practice of investing money collected from a single or few investors in stocks, as a guard against manipulation.

Rejecting the demand from FIIs for extension of the October one deadline for compliance with the new rules, Sebi Chairman C B Bhave said FIIs will have to register afresh under a structure conforming to the new norms.

The new guidelines require that FIIs or each of their sub-accounts must have not less than 20 investors, except for a few entities like pension funds.

There have been concerns that a few high-networth individuals have been playing the stock market using the FII route.

The norms also require that no single investor accounts for 49 per cent of the fund raised for investment.

"Foreign Institutional Investors (FIIs) have to comply with October 1 deadline," Bhave told reporters on the sidelines of a merchant banking industry function here.

On the surge in stocks, driven by huge investment inflows from the FIIs, Bhave said, "As of now we are not concerned with the trail of money into the domestic market."

He, however, said that the surge has not resulted in any trade settlement related problems and that the regulator was keeping a close watch.

Besides, on the issue of bringing down the IPO listing period to seven days from current 20 days, he said that it is not a mandatory, but an observation. "Our panel is looking into the practicality of its implementation. Our panel is likely to come out with its report by November post which we will take a call."