India’s markets regulator on Wednesday tightened regulations on offshore derivatives by increasing fees and banning the sales of certain products, while at the same time easing registration rules for foreign portfolio investors. Securities and Exchange Board of India (SEBI) said its board had decided to impose a fee of $1,000 every three years, starting from April 1 this year, on each offshore derivative instrument (ODI) subscriber to be collected by the issuer.
SEBI also said it would prohibit ODIs that track derivatives except for those issued for hedging purposes, in a statement issued at the conclusion of its quarterly board meeting. The regulator added it would ease some rules for foreign portfolio investors, including expanding the eligible jurisdictions for registration under this category to more countries with diplomatic tie-ups with India.
The move is intended to steer more funds to register as foreign portfolio investors instead of investing through ODIs that track Indian assets, which are harder to oversee for Indian regulators.