FPIs issuing ODIs must register separately under a dedicated FPI category, with the name suffixed by “ODI” under the same PAN. This separate registration rule does not apply to ODIs with government securities as the underlying assets.

The market regulator has barred foreign portfolio investors from issuing offshore derivative instruments (ODIs) with derivatives as underlying or use derivatives to hedge their ODIs in India.

The market regulator on Tuesday mandated granular disclosures on ownership and economic interest for offshore derivative instruments (ODIs)—aligning the rules with those for foreign portfolio investors (FPIs) to prevent any regulatory arbitrage.

Sebi has prohibited Foreign Portfolio Investors (FPIs) from issuing Offshore Derivative Instruments (ODIs) with derivatives as underlying or using derivatives to hedge their ODIs in India. The measure aims to address regulatory arbitrage for ODIs and FPIs with segregated portfolios.

Sebi has banned FPIs from issuing ODIs with derivatives as underlying or using derivatives to hedge ODIs in India. FPIs can issue ODIs only through a separate dedicated registration, with government securities as the only permissible underlying.

The ODIs that are already issued and outstanding with derivatives as underlying can be redeemed within 1 year, with no renewal of such ODIs.

SEBI tightens rules on offshore derivative instruments for FPIs to boost transparency and align with market conditions.

In a circular issued on Tuesday, December 17, the Securities and Exchange Board of India (SEBI) 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.