FPIs prohibited from issuing ODIs with derivatives as underlying instruments SEBI

Securities and Exchange Board of India (SEBI) said in a latest notification that FPIs cannot issue offshore derivative instruments or ODIs with derivatives as reference/underlying and that also cannot hedge their ODIs with derivative positions on stock exchanges in India. ODIs can only have securities (other than derivatives) as underlying and shall be fully hedged with the same securities on a one-to-one basis, throughout the tenure of the ODI, it noted. The regulator has noted that FPIs can now only issue offshore derivative instruments (ODIs) 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. This requirement of separate dedicated registration will not apply for issuance of ODIs with government securities as reference/underlying, according to SEBI. The overseas investors also must collect and maintain ownership information about shareholders who control the ODIs they issue.

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