ODIs by GIFT FPIs (non-bank entities) permitted

ODIs by GIFT FPIs (non-bank entities) permitted

Brief Overview:

ODIs can be now issued by non-bank entities registered with IFSCA and registered with SEBI as an FPI.

ODI (Offshore Derivative Instruments) are derivatives with Indian Securities as underlying.

Post recognising ODIs as valid derivative contracts under Indian securities law, till now only IBUs registered as FPIs were permitted to issue ODIs out of GIFT-IFSC.

IFSCA has now extended this to cover remaining class of entities in GIFT-IFSC and registered as FPIs with SEBI.

Technical Details:

Such (non-banking) FPI entities will need to comply with requirements of an ODI prescribed by SEBI and IFSCA. Additionally, reporting requirements by Clearing Corporations in GIFT-IFSC will also have to be adhered to. The SEBI restriction of allowing only allows Category I FPIs to issue ODIs will continue.

JC takeaway:

This should be seen as another step forward by the Indian authorities in wanting to get back to India, business transaction related to India. Gradually, the use of GIFT City as a base for issuance of ODIs is being made attractive.

For further details, please see:  

Issuance of Derivative Instruments against Indian securities by non-bank entities in GIFT-IFSC

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