FPIs Likely To Get 3 Months To Cut Exposure Under Disclosure Norms: Report

Foreign portfolio investors (FPIs) are looking to avoid making greater disclosures after the Securities and Exchange Board of India (SEBI) approved tighter disclosure rules to prevent misuse of overseas investment routes and prevent violation of public shareholding regulations. They are likely to be given a shorter deadline to cut off their investments than what was initially decided by the market watchdog
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The foreign fund holders have informed SEBI that existing FPIs can cut their investments below the cut-off levels determined for tighter scrutiny within three months from the date of notification of the latest norms as against six months indicated earlier, reported the Economic Times. 

According to the fund industry and custodian circles, the SEBI should avoid the ‘high-risk’ tag in categorising FPIs which have major investments in the Indian equity market. The custodians include large multinational banks and local non-banking firms acting as bookkeepers of the funds, reported ET. 

According to SEBI’s latest norms, FPIs except sovereign funds, public retail funds and pension funds, holding more than 50 per cent of their Indian equity assets in a single corporate group, and those managing more than Rs 25,000 crore in equities in India would have to disclose identities of their ultimate beneficial owners (UBOs) who are the last natural persons behind the multiple vehicles in an FPI structure. 

In a press release last week, SEBI said these disclosures have to be on ownership, economic interest and control of these funds. SEBI described such funds with exposures exceeding the threshold levels were described as ‘high-risk’. "The term high risk may be misinterpreted in certain circles. Perhaps, Sebi can describe them differently, like 'reportable entities'," reported ET citing an industry expert.