Sebi Tightens Rules on Offshore Derivative Instruments

The Securities and Exchange Board of India (Sebi) has banned Foreign Portfolio Investors (FPIs) from issuing Offshore Derivative Instruments (ODIs) with derivatives as the underlying asset. This move aims to reduce regulatory loopholes. FPIs must register separately for ODIs, and detailed ownership disclosure is required in certain cases.

The Securities and Exchange Board of India (Sebi) announced a significant policy change on Tuesday, prohibiting Foreign Portfolio Investors (FPIs) from using Offshore Derivative Instruments (ODIs) with derivatives as the base asset.

This new measure is focused on closing regulatory loopholes associated with the use of ODIs and ensuring FPIs with segregated portfolios adhere to stricter guidelines.

Furthermore, Sebi mandates a separate, dedicated registration for ODIs, requiring the suffix 'ODI' to be added to existing registrations without it being considered a name change. Disclosures about ownership must reach the level of natural persons in cases exceeding set thresholds.