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P-note: FIIs seek clarity from SEBI Mumbai
Compliance officials of leading foreign institutional investors (FIIs) on Tuesday met with capital market regulator, SEBI, seeking greater clarity on the easing of restrictions on issuance of participatory notes. People familiar with the development said the overseas portfolio investors sought clarity on issues like whether FIIs would be allowed to issue overseas derivative instruments (ODIs) through their sub-accounts and if P-notes can be issued only by regulated and registered entities and the effective date of implementation. The meeting included representatives from Goldman Sachs, UBS, JPMorgan, Citi and HSBC, among others. While the regulator issued a circular stating that Tuesday would be the effective date of implementation, there was some ambiguity over issuance of PNs to registered entities. “SEBI did clarify that restriction on issuance would be only to a regulated entity (as defined earlier). However, there are still some doubts about registered entities,” said people familiar with the matter. FIIs in general have hailed the move. Says Kaku Nakhate, co-head of Equities, DSP Merrill Lynch Limited: “It's a welcome move and reflects the confidence of our regulators in the robustness of the Indian capital markets amid global volatility.” A senior official said: “It is a positive in that when the world over, markets are imposing restrictions, the regulator here is opening up the market. It sends out reassuring signals that the market will not trade away. In fact, this is evident in that Nifty options volumes were up at $4.9 bn, while futures were higher by 31% over the 5-day average.” However, sceptics believe that reversal of ban or not, global cues would largely impact flow of capital not only to India but emerging markets, in particular. [Source: The Economic Times]
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