SEBI brings FIIs, QFIs under Foreign Portfolio Investor regulations

Capital markets regulator Securities and Exchange Board of India (SEBI) on Saturday announced new `Foreign Portfolio Investor (FPI)' regulations to put in place easier registration process and operating framework for entities coming under the category.

The new class of investors, FPIs, would encompass all foreign institutional investors (FIIs), their sub-accounts and qualified foreign investors (QFIs), and would be divided in three categories as per their risk profile.

All existing qualified foreign investors (QFIs) may continue to buy, sell or otherwise deal in securities till the period of one year from the date of notification of this regulation. In the meantime, they may obtain FPI registration through DDPs.

The registration granted to FPIs by the DDPs on behalf of SEBI will be permanent unless suspended or cancelled by SEBI.

FPIs will be allowed to invest in all those securities, wherein FIIs are allowed to invest.

Category I and Category II FPIs will be allowed to issue, or otherwise deal in offshore derivative instruments (ODIs), directly or indirectly.

However, the FPI needs to be satisfied that such ODIs are issued only to persons who are regulated by an appropriate foreign regulatory authority after ensuring compliance with 'know your client' norms.

Designated Depository Participants (DDPs) will be an authorised dealer Category-1 bank authorised by Reserve   Bank of India, depository participant and custodian of securities registered with SEBI.

Depository will forward the application of DDP along with its recommendation to SEBI for grant of approval.

SEBI registered custodian of securities will be deemed to be DDP subject to payment of fees as prescribed in the regulations.

SEBI approved qualified depository participant not meeting the DDP eligibility criteria may operate as DDP for a period of one year.