FPIs seek a month's extension from Sebi to furnish depository receipts info

Custodians want FPIs to provide ODI and DR details directly to depository instead of routing it through them

Custodians have reached out to market regulator Securities and Exchange Board of India (Sebi) as well as depositories to extend the deadline for providing details on depository receipt (DR) and offshore derivative instrument (ODI) investments to the latter by a month.

The custodians also want foreign portfolio investors (FPIs) to provide ODI and DR information directly to the depository instead of routing it through them. This is because FPIs are reluctant to divulge this information to custodians as they deem it to be confidential.

"The custodians want FPIs to upload the required ODI and DR information directly on the NSDL portal. FPIs are reluctant to provide this information on email and the compliance teams of custodians are also unsure whether to take such confidential data on email," said a person familiar with the matter.

Sebi had notified the framework for monitoring of foreign holding in depository receipts in October last year. The framework prescribes the process for monitoring foreign holding in DRs (including investor group limits), mechanism for reissuance of DRs, reporting requirements for FPIs as well as custodians and calculation of limits for conversion of permissible securities into DRs.

"As per the guidelines, FPIs will be required to designate a nodal FPI, identify additional related entities, and collate investment details from such entities. Given the short window of go-live date it would not be feasible to provide the same and would result in non-compliance with the requirement," said a recent note written to NSDL by foreign custodians.

FPIs are required to report details of all FPIs forming part of the same investor group as well as ODI subscribers and/or DR holders having common ownership, directly or indirectly, of more than 50 per cent or on the basis of common control, to its designated depository participant (DDP) from April 10.

The investor group may appoint one such FPI to act as a nodal entity for reporting the grouping information to its DDP in the prescribed format. Further, such nodal FPI shall report the investment holding in the underlying Indian security as held by ODI subscriber and/or as DR holder, including securities held in the depository receipt account upon conversion, to its domestic custodian every month.

Likewise, FPIs that do not belong to the same investor group are to report such investment holding details in the underlying Indian security as ODI subscriber and/or as DR holder to its custodian by the tenth of every month.