Sebi lifts ban on Barclays for issuing ODIs

The Securities and Exchange Board of India, in December last year, had banned Barclays Bank Plc from issuing overseas derivative instruments (ODI) following its failure to provide "true and accurate picture of transactions" as required by the regulations.

"The deficiencies in the systems and processes of Barclays have now been remedied ... The ex-parte directions issued against Barclays Bank PLC vide the order dated December 9, 2009, shall stand revoked with immediate effect," SEBI said in a ruling.

ODIs are investment vehicles issued by Foreign Institutional Investors (FIIs) to unregistered overseas investors for parking their funds in Indian equities and derivatives.
The market regulator said the British bank has taken steps to streamline its system.

"From submissions made by Barclays and the review reports of KPMG ... Barclays has undertaken steps to validate its systems and processes to ensure that true and correct reports of its ODI activity are furnished to SEBI," the order said.

SEBI had banned Barclays from issuing ODIs after finding that the bank had been "non-compliant with the provisions of regulations and is not capable of providing information."

The case pertains to reporting of four ODIs issued by Barclays back in December 2006 with Reliance Communications as underlying assets. Initially, Barclays in its report to SEBI had said that ODIs were issued to the UBS AG. Later, the bank told the regulator that they were issued to Hythe Securities and not UBS.

In its December 2009 order, SEBI had asked the bank to furnish a certificate from an auditor of international standing about its ability to correctly report transactions. "The reviewer (KPMG) has...certified that information provided in the reports of Barclays to SEBI during the review period is in all material respects, accurately extracted from the source systems of Barclays and accurately reflects all outstanding positions for ODI," the latest order said.

KPMG had furnished an assurance report in this regard on June 3. "As the situation has been remedied and the aforesaid directions in the order have been complied with by Barclays ... the ex parte directions issued against it vide the order need not continue and can be withdrawn," SEBI said.