The Securities and Exchange Board of India (Sebi) board today decided to allow FIIs to trade in all derivative products, and has said that physical deliveries in stock options/future contracts will start from April 2002.
Sebi has decided to encourage foreign institutional investors (FIIs) participation in individual stock futures and options and will write to the Reserve Bank of India and the government to issue suitable instructions.
FIIs were hitherto allowed to trade only in index futures to the extent of their exposure in the cash market, subject to restrictions laid down by the RBI. The FIIs will be treated at par with regular trading members, and their positions will be monitored.
The Sebi board also agreed that physical settlement of both single stock option contracts and single stock future contracts could start from April 2002.
Settling the issue of applicability of the takeover code, whenever a block of shares change hands between PSUs, the Sebi board maintained the earlier exemption for such PSUs from making open offer to the general public. However, in case the PSU acquires 15 per cent or more shareholding through a competitive bidding process, the exemption will not apply and it will have to make an open offer to acquire at least 20 per cent from the public shareholders.
This has been done with a view to provide a level playing field amongst the bidders in a competitive bidding process of a listed PSU by the central government.
Also, Sebi said the date of opening of financial bids will be the relevant cut off date for calculating the open offer price in case a company acquiring more than 15 per cent shares in a divested PSU, with frequently traded shares. The 26-week period for calculation of the open offer price will have nothing to do with the date on which the central government announces the name of the successful bidder. Sebi said this change will enable the bidders to take into account the price of the shares prior to opening of bids and thus, minimise the occasional possibility of the unsuccessful bidders manipulating the market price.
The board decided that in case of infrequently traded PSU shares, the highest price paid by the successful bidder arrived at after the process of competitive bidding under the share purchase agreement shall be the minimum public offer price.
