OPERATING GUIDELINES FOR

REPORTING OF TRANSACTIONS BY

FOREIGN INSTITUTIONAL INVESTORS
 
 

SECURITIES AND EXCHANGE BOARD OF INDIA

Version 2.0

JULY 2002

The Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 (hereinafter referred to as ‘Regulations’) stipulate the modalities of portfolio investment by Foreign Institutional Investors (FII) in the Indian securities markets. Regulation 16 of the Regulations, inter-alia stipulates as under :

"16. (1) A Foreign Institutional Investor or a global custodian acting on behalf of the Foreign Institutional Investor, shall enter into an agreement with a domestic custodian to act as custodian of securities for the Foreign Institutional Investor.

(2) The Foreign Institutional Investor shall ensure that the domestic custodian takes steps for

(a) Monitoring of investments of the Foreign Institutional Investor in India;

(b) reporting to the Board on a daily basis the transactions entered into by the Foreign Institutional Investor;

(c) preservation for five years of records relating to his activities as a Foreign Institutional Investor; and

(d) furnishing such information to the Board as may be called for by the Board with regard to the activities of the Foreign Institutional Investor and as may be relevant for the purpose of this regulation. "

With a view to monitor the trends of investment by FIIs, SEBI had asked the FIIs to submit the details of transactions made by them on daily basis as specified in regulation 16 (2) (b) of the Regulations.

Initially the FII transaction reporting was done in dBase. Subsequently a comprehensive program was developed in Oracle for this purpose. The operational guidelines for the Oracle program have already been communicated vide Circular No. FITTC/CUST/3/1998 dated November 20, 1998. The operational guidelines / procedures have been reviewed and modified to include reporting of transaction related to buyback, open offers, write-off of securities etc..

The revised guidelines also include reporting of debt transactions which would be implemented from July 20, 2002. Custodians should continue to report daily debt transaction in the existing format (dBase) till further instructions.

Section A: Reporting of Equity Transactions

Daily Reports (DTR):

1. The FII transactions are to be reported to SEBI through daily reports. Custodians would submit a Daily Transaction Report (DTR) along with the Daily Transaction Summary (DTS) in specified formats. The form and order of fields of DTR, DTS, field description and widths etc. are enclosed as Annexure A and B respectively. The format of DTR is given in Annexure I.
2. The files names to be used for submitting the report in soft copies are as follows :


DTR: DR<ddmmyy>.txt

DTS: DS<ddmmyy>.txt

3. The DTR and DTS would be submitted in both hard and soft forms. All statements should be signed by the Head of Custodial Operations of the custodian.

 

 

4. The data in DTR would be submitted in " TEXT " format with fields separated by " | " (i.e. Pipe).
5. The code numbers for FIIs and sub-accounts in the DTR should be the same as those given by SEBI.
6. Transactions in unlisted securities and securities which may not have ISIN codes may be reported by mentioning NO_ISIN in the ISIN field. (The purpose of ISIN in the report is to identify the company and not any particular series of shares. Wherever an ISIN for a specific series of shares is not available, a previously known and available ISIN for the same share may be used).However every effort should be made to report the transaction with the ISIN code.
7. The SEBI (Foreign Institutional Investors) Regulations, 1995 permit FIIs to invest in unlisted securities. Currently the custodians are reporting trades for unlisted securities under 'no ISIN' or custodian generated codes. With a view to have a proper scrip identification, it would be necessary to have ISINs for such securities also. To generate ISINs, information in the enclosed format (Annexure H) is required to be submitted to SEBI. Information on scrips where investment has already been made in the past should be submitted within 10 days of issue of this circular. Information with respect to new unlisted scrips should be submitted within 10 days from the date of reporting of the transaction.
8. The transactions should be reported at the exact transaction price and charges such as brokerage/service tax etc. should be excluded.
9. The data in the DTR and the DTS should be reconciled by the custodian before submission. In case the data does not tally, it would not be possible to load the same. The custodians are therefore advised to ensure proper supervision at their end before sending the reports. As and when the DTR and DTS do not match (either because of physical damage, error records^* or wrong data), the floppy would be returned to the custodian and the same would have to be rectified and resubmitted on the same day. In case the rectified file is resubmitted on the next working day, it should be clubbed with the next working day’s reporting with report date and file name both bearing the current date as reporting date.


*Error records would be generated if the mandatory fields in the DTR are not filled.

10. In case of transactions where the trades do not involve an exchange and broker, the exchange code and the broker code in the DTR should be 99 and 999999999999 respectively.
11. The nature of transaction for objections square off would be same as the appropriate code for square off i.e. code 13 or 14.

1. Subscription in public/preferential/rights issues:


Applications made for allotment of securities in a public/preferential/rights issue need not be reported. Such transactions are to be reported only on allotment and to the extent of actual allotment received. Similar procedure is to be followed in respect of lodgment of shares in open offers, buybacks etc.. Custodians may devise appropriate internal procedures to record lodgment of applications / securities etc.

2. Reporting of merger/amalgamation/splitting of shares:


The reporting should be done on the basis of credit of shares to the clients account.

3. Debenture Conversion: In case of debenture conversion into equity, the reduction in value of debenture to be shown as a sale transaction in debt report with transaction code (08). The acquisition of equity be reported as a conversion transaction (which would be deemed as a purchase) in the equity report at conversion rate giving transaction code as (06). The net investment as on that date would generally be nil. Efforts should be made to report both legs of the transaction on the same day. However, in case any cash is either received or given, the same should be added to the rate field in sale and purchase trades appropriately.
4. Merger/Amalgamation cases: In a merger, the existing shares are exchanged for the shares of resulting entity after the merger. Thus, the first leg of the trade has to be a sale of the shares which have been surrendered to the company, where the price of shares would be nil, and the Nature of Transaction 16. In case cash is received by the client, the same should be incorporated in the price.


The second leg of the trade would be the receipt of the new shares, again at a nil value and the Nature of Trade as 07. In case the client receives debt security also along with shares, then there would be another purchase transaction (with code 07 again) with price nil.

5. Buyback of shares and Open Offers: The shares accepted by the company are to be shown as sale with nature of transaction as 11 for buybacks and 09 for open offers. The rate of buyback / open offer may be appropriately incorporated. If fresh shares are also received along with the cash, then this receipt of shares is to be shown as a transaction with nature of transaction code as 07. In case the client receives debt security also along with shares/cash, the following may be followed:


The equity shares lodged will be shown at full value received i.e. cash received plus the value of debt component. Then there would be another purchase transaction in the debt report (with code 06) with the acquisition rate.

Eg: if a company offers to buyback / make an open offer to buy securities @ Rs.150/- per share comprising cash component of Rs.50/- cash and a debt instrument of Rs.100/- face value, then the equity report will reflect full value received as Rs.150/- and the debt report will show a purchase of debt instrument @ Rs.100/-.

6. Splitting of shares:


The quantity of shares which are getting split should be reported as sale, with the nature of transaction code as 15. The quantity of shares which are received should be reported as purchase, with nature of transaction code as 07. The price field in both the records would be zero.

7. Warrants:

Warrants when allotted shall be reported with the appropriate purchase code. At the time of sale in open market they have to be reported as sale with code 04 and stock exchange and broker code as 99 and 99999999999 respectively. In case the warrants are exercised, the transaction of warrants should be shown as a sale at code 08 with the rate as the original purchase value of the warrants. The shares or securities allotted in lieu of warrants may be reported as a purchase with code 05 with the total exercise price as the rate. In case, the warrants lapse/expire, the transaction should be shown under code 17.
 
  For example, suppose one warrant was purchased for Rs 100 . The purchase has to be reported appropriately. If the warrant is subsequently sold at Rs 105, it has to be shown under code 04 and value Rs 105. If the warrant is exercised to subscribe equity shares @Rs 1000 each, the transaction of exercise of warrants should be reported under code 08 with value Rs 100 and a corresponding purchase of equity shares @ Rs 1000 under code 05. In case the warrant is not exercised and it lapses, it has to be reported under code 17 with zero value.

Section B: Reporting of Debt transactions

The file names to be used for submitting the report in soft copies for debt reports are as follows:

Daily Debt Transaction Report - DDR<ddmmyy>.txt

Daily Debt Transaction Summary- DDS<ddmmyy>.txt

The format for the debt DDR and DDS would be the same as the formats for the equity DTR and DTS.

The operational guidelines are as under:

1. Some instruments are traded just like equity i.e. price for each unit of debenture / bond is quoted… In such cases the quantity may be quoted as "actual number of units" transacted.


In such cases transactions may be reported in the same manner as in equity. The transaction quantity and transaction rate fields would contain the actual quantity and rate.

2. Some instruments like government dated securities, Treasury bills, government loans etc are quoted on a base of "Rs. 100". Instruments like Treasury Bills, Dated Government securities, Government loans, certain types of corporate / institutional bonds etc. are generally traded on a Rs 100 basis. It is observed that an instrument which is quoted on a Rs. 100 basis is traded in all markets in such a manner.

For reporting transactions in these kind of securities, the transaction quantity may be quoted in terms of gross value of debt (i.e. face value of debt) that the seller is offering and not in "number" terms like equity. The transaction rate field would contain the actual market quote of the instrument (this quote will be for a Rs 100 value of the security). Our system would compute the transaction value in such cases as :

Transaction quantity * Transaction rate/100

Custodians are advised to strictly follow the above methodology for reporting of transactions in such securities

1. The securities name in the debt report should encompass the entire details of the securities i.e. coupon rate, issuer, maturity, series, other features, etc
2. The interest portion and any other charge/commission has to be excluded from the debt trade report.
3. The nature of transaction for debt securities will be the same as that for equity as given in Annexure C.
4. In case of nature of transaction where the trades may not involve an exchange and broker the exchange code and the broker code in the DTR should be 99 and 999999999999 respectively.
5. In case of any amendment of the transactions, the amended transaction is to be reported again with same Transaction Identity No. and Reporting Type as : Amendment (the appropriate codes as given in the annexure are to be used in the soft copy of the report). In case of deletion of a transaction, the transaction be reported with same Trade ID and Reporting Type as: Deletion.
6. In case of debenture conversion into equity, the reduction in value of debenture to be shown with value as a sale transaction with transaction code (08) in the debt file. This transaction would be balanced with the acquisition of equity to be reported in the equity file as a conversion transaction (which would be deemed as a purchase) at conversion rate with transaction code (06). However, in case any cash is either recd. or given, the same should be added to the rate field in sale and purchase trades respectively.

Section C: Monthly Reports

The custodians are required to submit a Monthly Portfolio Report (MPR). MPR would detail the portfolio holdings of the FII and would be submitted in soft and hard form (format enclosed as Annexure J). MPR is to be submitted by 10^th of the following month after incorporating all the amendments and cancellations till that date. The file name to be used for the monthly reports is as under:

MPR: MPR<mmyy>.txt
 
 

1. Matching of MPR with daily reports:


When the MPR is not matching with SEBI’s data, SEBI would be sending the transaction records, which are not matching, to the custodians for reconciliation. The custodians would verify their records, and within one week of receipt of such query from SEBI, report the correct transactions in the DTR and also submit the details thereof through a specific letter.

2. Monthly reconciliation of debt transactions:

In view of small number of debt transactions specific formats for monthly debt report are not being specified at present. However the custodians are required to submit a hard copy of the consolidated statement for the whole month by the 10^th of the following month in DDR format after incorporating all the amendments and cancellations till that date. Section D : General instructions:

These are general instructions to be followed by the custodians while compiling and submitting daily reports to SEBI.

1. The date format to be used for all reports submitted to SEBI would be DD-MON-YYYY.
2. Custodians must ensure that the data submitted is accurate and complete and does not contain any blank or incomplete records.
3. All transactions will have a unique transaction identification number (ID) which would be given by the custodians at their end. Custodians are free to give any ID as per their own system. It should however be ensured that the ID is not repeated.
4. To avoid any confusion regarding the name of the security, ISIN codes should be used. The appropriate ISINs for scrips as applicable for the physical and demat form, etc. are to be used. Some of the sites where list of ISIN codes are available are mentioned below:

www.sebi.gov.in., www.nsdl.co.in, www.rbi.org.in.

1. Amendment / deletion of transactions:


In case of any amendment of the transactions, the amended transaction may be reported again with same Transaction Identity No. and Reporting Type as: Amendment (the appropriate codes as given in the annexure are to be used in the soft copy of the report).

In case of deletion of a transaction, the transaction be reported with same Trade ID and Reporting Type as: Deletion. A statement may be submitted in case of amendment / cancellation of transactions mentioning the reasons therefor.

All amendments / deletions should be reported on the day when information about the same is received by the custodian. Delay in reporting would be viewed seriously.

2. Sub division of contracts is to be reported as two transactions as indicated below:

1.  
   1. First transaction would be amendment of original transaction, should generally contain the larger of the quantity divided and would contain A in the R_Type field and R_Change as 07
   
    

    

   2. The second transaction would be reported with a new ID, with the remainder quantity with N as the R_Type, but in the R_Change field the code would not be 00 but 07 again.
   3. Similarly, if there are three or more sub divisions, the same may be reported as per the above paras.

1. Similarly, in case of consolidation of contracts, there would be two transactions as indicated below.

1.  
   1. First transaction would be amendment of the first original transaction and contain the consolidated quantity, would contain A in R-type and code 08 for consolidation in the R_Change field.
   2. The second transaction would relate to the deletion of the second original transaction, rest of the details same as the original transaction and in the R_type field it would contain D and the R_Change as 08.
   3. Similarly, if there is third, fourth or more contracts which have been consolidated and reported as above, in 14(i), then all those are also be deleted the same may be reported as per the above paras.

1. It has been observed that on many occasions, reports are received late or are incomplete or are submitted with different parameters than prescribed. This result in problems and delay in compilation of data. It is therefore suggested that all reports should be duly verified before submission and be signed by the Head of Custodial Operations. SEBI shall be monitoring the quality of reports being submitted and action may be taken against erring custodians.

Requests for clarifications, if any, may be addressed to Shri Akalpit Gupte, Assistant General Manager or Shri Narendra Rawat, Manager on phone : 91-22-285 0451 / 288 0962 Extn. 327 and Extn:311 respectively or facsimile no. 91-22-2845776 or e-mail – akalpitg@sebi.gov.in ; narendrar@sebi.gov.in

LIST OF ANNEXURES

Order and parameter of Fields for the Daily Transaction Report

(DTR and DDR)

C - Character N - Number

N (12,2) - Number with 10 integers and 2 decimal digits

DAILY TRANSACTION SUMMARY

(DTS and DDS)

(This is the print format for the DTS, the soft copy would contain the values only as a single record in a flat txt file)

The field specifications of the value field for items 1-16 is: Numeric (16,2)

For the above entries the following transaction types would apply for calculation of the values:

*The transaction codes are as identified in the Annexure C
 
 

Nature of transaction Codes

* this is to indicate any security other than equity share received in respect of dividend, bonus, open offer etc.

Stock Exchange Code

Settlement Code

C- Settlement through Clearing House

1. Hand Delivery settlement not involving Clearing House
2. Clearing house transactions settled through Hand Delivery due to non-receipt of client confirmation
3. Other (Public issue, etc.)

Type of Security/ Instrument

18. R-DELAY: Reasons for delay in reporting

1. P - Prompt reporting
2. D - Delay in receipt of contract from broker

S - System failure at custodian office

O - Other delay reasons

19. R_TYPE : Reporting Type N- New Transaction

1. Amendment in earlier reported transaction

D- Deletion of earlier reported transaction

REASONS FOR AMENDMENT / DELETION OF TRADES

For regular transactions, which are basically new transactions, the R_Change field should contain the code ‘00’. In case of amendment due to change of two or more parameters, the same may be reported with the code 16 and not as separate amendments. Transactions with code 17 are to be reported in hard format also with details.
 
 

Order of fields and parameters for the Monthly Portfolio Report

(MPR)

The soft copy, in txt format, would contain only the data fields separated by "pipe" character.

C - Character N - Number

N (16,2) - Number with 14 integers and 2 decimal digits

FORMAT FOR ISSUANCE OF ISIN FOR UNLISTED SECURITIES

I hereby agree and declare that the information provided above and the undertakings given above are complete and true.

Undertaking

I further agree that we will immediately notify the Securities and Exchange Board of India of any change in the information provided.

  Managing Director / Chief Executive Officer

Place:

Date:

Certified by Statutory Auditor of the Company

Place:

Date: