MUMBAI May 29 India's capital market regulator
on Monday proposed to tighten rules on offshore derivative
instruments (ODI) by imposing "regulatory fees" and prohibiting
the sales of such products unless they are issued for hedging
In a consultation paper, Securities and Exchange Board of
India (SEBI) proposed that ODI issuers be given tiLl Dec. 31,
2020 to wind down any ODIs issued for speculative purposes.
Those undertaken for hedging would be allowed, however.
In addition, SEBI proposed to set a fee of $1,000 every
three years starting on April 1, 2017 on ODI issuers and also on
each investor in these instruments in order to "discourage the
ODI subscribers from taking ODI route" and encourage them
instead to register themselves as foreign portfolio investors.
ODIs are instruments such as participatory notes, or
P-notes, created by banks to track Indian shares, debt and
The investments have been highly controversial because of
regulatory suspicions they are a conduit for money laundering or
the channeling of unaccounted wealth held by Indians abroad into
SEBI said interested parties must submit comments to it by
For full statement see: bit.ly/2r3ShWA
($1 = 64.4950 Indian rupees)
(Reporting by Suvashree Dey Choudhury; Editing by Rafael Nam)