FPIs can directly trade in corporate bonds

 Market regulator Sebi on Friday decided to allow well-regulated Foreign Portfolio Investors (FPIs) to trade directly in these securities without any broker.

Currently, FPIs can trade in Indian markets only through brokers who are registered with the stock exchanges as their members.

“Category I and Category II FPIs will have an option to directly access the corporate bond market without brokers as has been allowed to domestic institutions such as banks, insurance companies, pension funds. Access to over-the-counter (OTC), request for quote (RFQ), and electronic book provider (EBP) platforms of regional stock exchanges (RSE) will be provided to FPIs only for proprietary trading, and participation of FPIs will help in deepening the corporate bond market,” Sebi said.

“Proposal for amendment to Rule 8 (4) of Securities Contracts (Regulation) Rules, 1957 will be taken up with the Government of India to permit FPIs to become a member of a RSE for the limited purpose of proprietary trading. Necessary amendments to the Sebi (Foreign Portfolio Investor) Regulations, 2014 shall be made in this regard,” Sebi added.
 The market regulator also approved increase in limit of foreign investment in Indian stock exchanges to 15% from 5%.

“Regulation 17 (3) of SECC Regulation has been amended to increase the limit of shareholding of foreign institutional investors mentioned therein in Indian stock exchanges from 5% to 15%,” stated Sebi.

“Regulation 17 (4) of SECC Regulations has been amended to allow a foreign portfolio investor to acquire shares of unlisted stock exchanges through transactions outside of recognised stock exchange including the initial allotment,” Sebi said.