Sebi allows clearing corps at IFSC to invest in foreign sovereign securities

Markets regulator Sebi today allowed clearing corporations at international financial services centres (IFSCs) to invest their own funds in foreign sovereign securities with the highest credit quality.

However, the investment in such securities would not exceed a limit of 10 per cent of the total investible resources, excluding funds lying in core settlement guarantee fund of the clearing corporation, the Securities and Exchange Board of India (Sebi) said in a circular.

The decision has been taken following the review of investment instruments available for clearing corporations in IFSC and based on the feedback received from market participants.

Currently, the clearing corporations are permitted to invest their own funds as well as funds lying in core settlement guarantee Fund in fixed deposits or central government securities and liquid schemes of debt mutual funds.

Now, Sebi has "decided to permit the clearing corporations in IFSC to invest their own funds in AAA rated foreign sovereign securities.

"However, the investment in such AAA rated foreign sovereign securities shall not exceed a limit of 10 per cent of the total investible resources, excluding funds lying in core settlement guarantee fund of the clearing corporations," it added.

Gujarat International Finance Tec-City (GIFT) has been set up by the state government as India's first IFSC that brings together world class infrastructure, connectivity, people and technology on a single platform for businesses across the world.

IFSC at GIFT City is probably the first such centre to be launched after the 2008 global financial crisis.

Sebi, in March 2015, had issued a detailed set of guidelines for establishing IFSCs as part of its efforts for setting up financial hubs in the country.