Capital markets regulator Sebi on Wednesday determined to permit international portfolio traders to take part within the exchange-traded commodity derivatives phase, a transfer that may additional enhance depth and liquidity available in the market.
The board of Sebi, throughout its assembly held on Wednesday, additionally authorised amendments to guidelines governing mutual funds and portfolio managers.
Further, it has cleared amendments to SECC Regulations provisions referring to Limited Purpose Clearing Corporation (LPCC) for clearing and settlement of company bond repo transactions.
In a major transfer, Foreign Portfolio Investors (FPIs) might be allowed to commerce in all non-agricultural commodity derivatives and choose non-agricultural benchmark indices.
Reliance Industries, SBI, ICICI Bank, Ruchi Soya, Route Mobile, Tata Steel shares in give attention to 29 June
Share Market LIVE: Sensex off day’s low, down 250 pts, Nifty tops 15750; Rupee at new lifetime low towards USD
Share Market LIVE: Sensex off day’s low, trades risky, Nifty close to 15850; Reliance, NTPC lead beneficial properties
Bharti Airtel share value outguns Nifty thus far in 2022; Motilal Oswal says purchase, shares might rally 34%
Initially, FPIs might be allowed solely in cash-settled contracts.
“The participation of FPIs in Exchange Traded Commodity Derivatives (ETCD) market is expected to enhance liquidity and market depth as well as promote efficient price discovery,” Sebi mentioned in a launch after the board assembly.
The regulator has already allowed institutional traders resembling Category III Alternative Investment Funds (AIFs), Portfolio Management Services and Mutual Funds to take part in ETCD market.
The present route, which required precise publicity to Indian bodily commodities, has been discontinued. Any international investor desirous of collaborating in Indian ETCD phase with or with out precise publicity to Indian bodily commodities can accomplish that by the FPI route.
Currently, international entities having precise publicity to Indian commodity markets, generally known as Eligible Foreign Entities (EFEs) are allowed to take part within the Indian commodity derivatives market.
However, FPIs being monetary traders with large buying energy weren’t allowed to take part within the ETCD phase.
Now, FPIs might be allowed to take part within the Indian ETCD market, topic to sure danger administration measures.
Further, a working group comprising representatives from Sebi and market individuals has been constituted to look at whether or not any further danger administration measures are required to be prescribed for FPIs.
The place limits for FPIs, apart from people, household workplaces and company our bodies, might be at par with these presently relevant for mutual fund schemes.
FPIs belonging to classes — people, household workplaces and corporates — might be allowed place restrict of 20 per cent of the consumer degree place restrict in a selected commodity derivatives contract, just like the place limits prescribed for forex derivatives.
“Effective date will be notified vide a circular,” the Securities and Exchange Board of India (Sebi) mentioned.
Considering that round 10,000 FPIs are presently registered in India, even when a tenth of them participates within the Indian commodity derivatives market, the identical might deliver appreciable liquidity in Indian ETCDs phase.
In addition, their participation might assist deliver down the transaction prices within the commodity futures phase, owing to economies of scale.
EFEs and FPIs each relate to the participation of international entities, with totally different nomenclature and standing assigned to the international traders.
The board of Sebi has additionally authorised an modification to mutual fund guidelines to take away applicability of the definition of “associate” to such sponsors, which spend money on varied corporations on behalf of the beneficiaries of insurance coverage insurance policies or such different schemes.
Further, it cleared the amendments to the portfolio managers guidelines to reinforce prudential norms for investments by portfolio managers, together with investments in associates and associated events.
The board thought of and authorised the proposals for making amendments to the provisions of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations to align the provisions of the SECC rules with these of the RBI Central Counter Party Directions.
In respect of the necessities of the RBI’s Directions for Central Counterparties and the Payment and Settlements Systems Act (PSS Act) administered by RBI, the board thought of and authorised sure proposals, in keeping with the discharge.
Over a time period, the LPCC shall put in place a mechanism for infusion of further capital in a phased method, in step with the danger administration and rising buying and selling volumes so as to meet the networth necessities beneath the PSS Act.
Among others, Sebi, in session with RBI, will evaluation the outsourcing agreements of the LPCC in relation to its core and demanding IT help infrastructure/ actions for working the core actions — transaction course of, clearing and settlement — after two or three years.
The board additionally thought of and authorised the Sebi annual report 2021-22 and the annual report could be submitted to the central authorities.
Source: www.financialexpress.com”