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Sebi may allow FPIs to trade directly in capital markets

 PTI |  2016-09-13 22:26:33.0  |  New Delhi

Sebi may allow FPIs to trade directly in capital markets

Currently, FPIs trade in Indian markets through domestic stock brokers, who gets a significant chunk of their revenues from such investors. The issue is likely to be discussed in the board meeting of Securities and Exchange Board of India (Sebi) later this month, sources said.

The regulator may float a consultation paper in this regard and the final decision will be taken after taking into account views of all the stakeholders.

Under the proposed norms, Sebi may permit overseas investors to directly trade in capital markets. It has proposed to begin with allowing them to trade in debt markets and gradually access to equity markets may also be permitted.

The norms might be applicable for Category-I FPIs that include sovereign wealth funds and central banks as well as Category-II FPIs, which include mutual funds and banks.

However, hedge funds, individuals and other high risk foreign investors may not get this facility. The move is aimed at boosting foreign inflows in Indian capital markets. However, it will have negative impact on domestic brokerage houses as they will lose out on revenue.

Currently, investments made by Sebi-registered FPIs in domestic capital market stood at Rs 11.5 lakh crore. This include Rs 8.45 lakh crore in equities and Rs 3.06 lakh crore in debt. 

Cos may need minority shareholders’ approval on special rights to PEs
Markets regulator Sebi is considering asking companies to seek minority shareholders’ approval before granting special powers relating to operations of the firms to non-promoters such as private equity investors. The move is aimed at protecting the rights of minority shareholders. The issue is likely to be discussed in the board meeting of Securities and Exchange Board of India (Sebi) later this month, sources said. A consultation paper may be floated in this regard and the final decision will be taken after taking into account views of all the stakeholders.

Under the proposed norm, Sebi may ask companies to seek approval of minority shareholders before granting special powers relating to operations of the firms to non-promoters such as private equity funds.

The new norms would ensure that special rights given to private equity funds are approved by minority shareholders. There are rules mandating special power relating to operations of companies to promoters, while there are no specific rules for private equity players, who have been making significant investments in new age companies. 


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