The Securities and Exchange Board of India (Sebi) is stepping up efforts to ease the onboarding of foreign portfolio investors (FPIs) and has constituted a cell for deliberations and consultations with the offshore investors and custodians, said whole-time member Ananth Narayan.
The market regulator is also working to make regulations ‘light-touch’ for those FPIs which only invest in government securities or are sovereign funds.
The Sebi official said that the regulator is trying to make the registration process easier for such FPIs.
These steps come at a time when the Indian bonds are being included in global indices, helping draw new investors.
“We trust them because they are regulated, and we know what they are doing. For these kinds of FPIs where we believe we don’t require much information, we are looking at ways to make life easier for people who have transparent funds. For example, using an FPI licence, is it possible to do many other things besides just investing in some listed space? Can we review the KYC periodicity and make life a lot more relaxed in terms of having to make disclosures,” said Narayan.
Further, the process might be made less onerous if an existing FPI investment manager is setting up a new FPI. They may not have to go through the complete common application all over again.
Sebi is also developing a tracker for FPIs to check the status of their application or the stage where it is stuck.
Speaking at the CII Financing 3.0 Summit, Narayan said that Sebi has formed an FPI Cell through which they are carrying out outreach programmes on regulatory outlook. The FPI Cell also works at a one-stop place for any FPI having issues in the registration or other process.
Till now, the cell has reached out to more than 500 FPIs and consulted with the 17 custodians.
“One of the feedbacks we keep getting are signatures, and lot of papers going across the globe. For such FPIs where there is trust, is there a way we can do away with wet signatures and papers flowing up and down by using things like ‘Swift’ in a manner which is still compliant with local legal requirements. There are a whole bunch of things we are trying to do,” said Narayan.
Sebi has also formed an industry standards forum with the help of designated depository participants and custodians for consultation and to implement the regulatory principles and set standards of dos and don’ts.
The Sebi official added that FPIs will be able to access funds on the day of settlement (T+1) from September 9. He said that the process has remained smooth till now and that the ecosystem has not seen any problems in settlement.
“The less we have of hidden charges, more transparent charges, it would be good for everybody. Would there be an increase in custodian charges because of this change? Sure. So far like in brokerage, custodian charges have been close to zero, there is no such thing as a free lunch. Convert what is considered implicit opaque charge into transparent charge,” said Narayan on concerns of increase in charges from custodians.
Narayan said the regulator plans to include offshore derivative instruments (P-Notes) and FPIs with segregated portfolios under the mandate of granular disclosures on economic interest and beneficial ownership.
The regulator had floated a consultation paper on the same on August 6. There have been over 3,300 feedback received on the proposals, the official said.
First Published: Sep 03 2024 | 7:45 PM IST
