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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

Measures to address regulatory arbitrage with respect to Offshore Derivative Instruments (ODIs) and FPIs with segregated portfolios vis-a-vis FPIs

17-Dec-2024 | SEBI/HO/AFD/AFD-POD-3/P/CIR/2024/176

SEBI has issued circular regarding measures to address regulatory arbitrage with respect to Offshore Derivative Instruments (ODIs) and FPIs with segregated portfolios vis-a-vis FPIs, effective from 17th December 2024. Key highlights- 1. Conditions for issuance of ODI's as specified in Para 1(i), (ii), (iii) of Part D has been substituted. According to the new conditions, a Foreign Portfolio Investor shall issue ODIs only through a separate dedicated FPI registration with no proprietary investments. 2. A new Para 4 has been inserted in Part D regarding additional disclosures by ODI subscribers that fulfill certain objective criteria. 3. Redemption of those ODIs with derivatives as underlying / reference, issued and outstanding as on the date of issuance of the circular shall be permitted within a period of 1 year from the date of issuance of the circular. Renewal of such ODIs is not permitted 4. Depositories are advised to put in place appropriate systems, procedures and mechanisms to ensure compliance with the provisions of the Circular within 5 months from the date of the Circular, i.e. by 17th May 2025.

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