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Sebi eases FPI rules for trading on IFSC

Times of India:  January, 2017

Mumbai: In an attempt to boost the government's Ease of Doing Business initiative, markets regulator Sebi on Wednesday said that foreign investors already registered with Indian regulators to trade on Indian bourses will not require any fresh registration for operating through the Gujarat-based International Financial Services Centre (IFSC).

All the brokers serving FPIs through IFSC are now allowed to use Sebi and RBI registrations for trading on IFSC. The centre has been set up within Gujarat International Finance Tec-City (GIFT City).

On January 9, Prime Minister Narendra Modi will inaugurate BSE's new international trading platform, India International Exchange, at IFSC in GIFT City. NSE, the largest stock exchange in India in terms of trading volumes, is also working to launch its own platform at the same facility.

On Wednesday, Sebi said that registered FPIs which are planning to operate in IFSC, "shall be permitted, without undergoing any additional documentation and/or prior approval process." When an FPI trades through the IFSC, "a trading member of the recognized stock exchange in IFSC, may rely upon the due diligence process already carried out by a Sebi registered intermediary during the course of registration and account opening process in India."

The market regulator also said that if an eligible foreign investor (EFI), who is not registered as an FPI but wants to operate in IFSC, the EFI's broker can accept the due diligence carried out by a bank, which is permitted by RBI to operate in IFSC, to open an account for that investor.

However, Sebi said that all those FPIs which are currently operating in India and now plans to operate in IFSC also, have to maintain separate books for the two operations. "Custodians shall, in turn, monitor compliance of this provision for their respective FPI clients. Such FPIs shall keep their respective custodians informed about their participation in IFSC," a Sebi circular said. It also directed all the stock exchanges operating on IFSC to maintain all the details of trading operations of their EFIs clients.