May 24, 2019
PR No.:
14/2019
SEBI publishes the report of Working
Group on "FPI Regulations" for public comments
SEBI had
constituted a working group on March 26, 2018 under the Chairmanship of Shri
H.R. Khan, Deputy Governor (Retired), Reserve Bank of India with the following
terms of reference:-
1. To
advise SEBI on redrafting the SEBI (Foreign Portfolio Investors) Regulations,
2014 for simplification.
2.
To advise SEBI on incorporating the provisions contained in the circulars,
frequently asked questions (FAQs) and operational guidelines issued by SEBI
concerning Foreign Portfolio Investors (FPIs), in the regulations itself, to
the extent possible.
3. To advise on any other issue relevant to
FPIs.
The working group has now submitted
its report on 'FPI Regulations' to SEBI.
A copy of the report is placed on the website www.sebi.gov.in.
The report contains recommendations
inter-alia w.r.t FPI registration process, know your client (KYC) and
simplification of documentation, investment restrictions and other aspects. Few
of the key recommendations proposed by the working group are as follows:
1. Ease of access - fast track
on-boarding process for select category II FPIs, review of broad based
condition for appropriately regulated entities, pension fund to be considered
for category I FPI registration, deemed broad based status for insurance/
re-insurance entities, simplified registration for multiple investment manager
(MIM) structures, entities established in the international financial services
centre(IFSC) be deemed to have met the jurisdiction criteria for FPIs, etc.
2. Simplification of documentation - removal of ‘opaque structure” definition,
simplified KYC documentation for category III FPI, KYC reliance on same group
regulated entity of custodian for non-PAN documents, etc.
3.
Review of Investment restriction - Liberalized investment cap, harmonization between
investment restrictions in FPI regulations and FEMA 20(R), reclassification of
investment from FPI to FDI, permitting FPIs for off-market transactions, review
of restriction on sovereign wealth funds for investment in corporate debt
securities etc.
4. Other aspects - strengthening of
clubbing restrictions, alignment between FPI and alternative investment fund
(AIF) routes, strengthening of offshore derivative instrument (ODI) framework,
etc.
The recommendations of the report have
been incorporated in the draft FPI Regulations and operating guidelines which
are annexed to the report. Further, the FPI regulations have been comprehensively
reviewed. Also, all the circulars and FAQs issued have been reviewed and
consolidated into a single document as 'operational guidelines' for ease of
FPIs.
Comments from public are invited on
the recommendations contained in the aforesaid report along with the draft FPI
Regulations and operating guidelines.
The comments may be submitted to fpi-review@sebi.gov.in
on or before 12:00 Noon on June 14, 2019.