India Markets Regulator Proposes Enhanced Disclosure Requirements for Foreign Investors Using Offshore Derivative Instruments – Consultation Paper
SEBI Proposal:
SEBI Suggests Applying Concentrated Holdings Disclosure Rules to Foreign Investors Using Offshore Derivative Instruments
The Securities and Exchange Board of India (SEBI) has proposed that the disclosure rules, which currently apply to concentrated holdings, should also be extended to foreign investors who engage in trading through offshore derivative instruments (ODIs).
SEBI’s Non-Compliance Measures: Offshore Derivative Instrument Subscribers Required to Liquidate Positions Within 180 Days
In cases of non-compliance with the new disclosure requirements, SEBI plans to mandate that subscribers of offshore derivative instruments must liquidate their positions within 180 days.
SEBI Proposes Monitoring of Positions Held Through Offshore Derivative Instruments by Derivative Providers and Depositories
SEBI has suggested that positions held via offshore derivative instruments should be monitored by both derivative providers and depositories to ensure adherence to the disclosure norms.
SEBI Proposes Restrictions on Derivatives Exposure for Offshore Derivative Instrument Subscribers
Additionally, SEBI is proposing to restrict the ability of offshore derivative instrument subscribers to have derivatives exposure as underlying assets.
Offshore derivative instruments with derivatives as the underlying asset must be redeemed within one year.
Offshore derivative instruments should have cash equity or debt securities as the underlying assets, and must be fully hedged.
