Sebi clarifies, FPIs only barred from issuing ODIs with derivatives as underlying

Market regulator Sebi has termed a news report stating that it is has prohibited FPIs from issuing Overseas Derivative Instruments (ODIs) as 'incorrect', and clarified that FPIs have only been barred from issuing ODIs with derivative instruments as underlying.

"It is clarified that FPIs have only been barred from issuing ODIs with derivative instruments as the underlying. As on date, there are no ODIs with derivative instruments as the underlying," said Sebi clarification. "It is further clarified that ODIs referencing cash market securities can continue to be issued," Sebi added.

In a circular on December 17, the capital market regulator had said that FPIs cannot issue ODIs with derivatives as reference/underlying, and that an FPI cannot hedge their ODIs with derivative positions on stock exchanges in India.

"An article has been carried in a section of media suggesting that SEBI has prohibited FPIs from issuing Overseas Derivative Instruments (ODIs). This is incorrect," said Sebi's clarification issued on December 18. ODIs that are referencing cash market securities can continue to be issued, the clarification added.