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Home » India News

Sebi proposes tighter rules for offshore derivatives; imposes regulatory fees

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Sebi proposes tighter rules for offshore derivatives; imposes regulatory fees
The logo of the Securities and Exchange Board of India (Sebi) is pictured on the premises of its headquarters in Mumbai. Image Source: Reuters
By Reuters
Updated: Mon, May 29, 2017
06:31 pm
Mumbai , Reuters
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The Securities and Exchange Board of India (Sebi) on Monday proposed to tighten rules on offshore derivative instruments (ODI) by imposing "regulatory fees" and prohibiting the sales of such products unless they are issued for hedging purposes.

In a consultation paper, Sebi proposed that ODI issuers be given till December 31, 2020 to wind down any ODIs issued for speculative purposes. Those undertaken for hedging would be allowed, however. 

ALSO READ: Sebi clears new framework to deepen corporate bond market 

In addition, Sebi proposed to set a fee of $1,000 every three years starting on April 1, 2017 on ODI issuers and also on each investor in these instruments in order to "discourage the ODI subscribers from taking ODI route" and encourage them instead to register themselves as foreign portfolio investors. 

ODIs are instruments such as participatory notes, or P-notes, created by banks to track Indian shares, debt and derivatives.

The investments have been highly controversial because of regulatory suspicions they are a conduit for money laundering or the channeling of unaccounted wealth held by Indians abroad into domestic markets.

Sebi said interested parties must submit comments to it by June 12.

For full statement of Sebi, it can be checked here-

ALSO READ: Sebi not in favor of tax incentives for market investments 

TAGS:
offshore derivativesEconomyMarketsSebiOffshore Derivative InstrumentsODIsSecurities and Exchange Board of IndiaParticipatory NotesP-Notes
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