Overseas investors begin registering as FPI

HSBC Securities, yesterday, became one of the first designated depository participant in the country to register as FPI

With a new regulatory regime for overseas investors coming into force, overseas entities including those affiliated to giants like Citibank and HSBC, have begun registering themselves as Foreign Portfolio Investor (FPI) for investing in Indian capital markets.

The FPI regulations, which has come into effect from yesterday, brings together all foreign investor classes such as Foreign Institutional Investors (FIIs), their sub-accounts and Qualified Foreign Investors (QFIs).

Foreign Portfolio Investors (FPIs) have been divided into three categories as per their risk profiles.

HSBC Securities, yesterday, became one of the first designated depository participant (DDP) in the country to register as FPI. Besides, Citibank and Deutsche Bank --have also registered for the new regime.

Many other entities are expected to follow the suit in the coming weeks.

The FPI regulations are designed to open up Indian securities market to a broader range of potential investors.

Under the new norms, FPIs have been divided into three categories as per their risk profile and the KYC (Know Your Client) requirements and other registration procedures would be much simpler for FPIs compared to current practices.

The Category I FPIs, which would be the lowest risk entities, would include foreign governments and government related foreign investors.

Category II FPIs would include appropriately regulated broad based funds, appropriately regulated entities, broad-based funds whose investment manager is appropriately regulated, university funds,university related endowments, pension funds, etc.

The Category III FPIs would include all others not eligible under the first two categories.

Meanwhile, Securities and Exchange Board of India, in a statement, today said that Sebi-approved Designated Depository Participants (DDPs) have already commenced granting registration to FPIs under the new framework.

"The migration of FPI regime has thus been effected in a smooth manner," the regulator said.

In order to ensure the seamless transition from FII regime to FPI, it was decided to commence the FPI regime with effect from June 1 so that requisites systems and procedures are in place before migration to the new FPI regime.