Sebi proposes enhanced disclosure norms for offshore derivative instruments

The Securities and Exchange Board of India (Sebi) has proposed that enhanced disclosure norms would be applicable for offshore derivative instruments (ODIs) and foreign portfolio investors with segregated portfolios.

This is to ensure that ODIs can't be used to sidestep the concentration norms. The concentration criteria mandate granular disclosure for FPIs holding 50% or more of their assets under management (AUM) in a single corporate group or holding over ₹25,000 crore of AUM in the Indian markets. The total value of ODIs as a percentage of the AUC (assets under custody) of FPIs was 2.1% at the end of FY24.

"..identification of BOs (beneficial owner) takes place even at the level of segregated portfolios held through sub-fund structures. Over the years, the value of outstanding ODIs has also been decreasing; however, potential regulatory arbitrage still exists between investments made through ODIs/FPIs with segregated portfolios with sub-fund structures vis-a-vis regular FPI route," Sebi said in a paper on Tuesday. As of July 2024, 35 FPIs hold investments through multiple segregated portfolios with different sub-funds or share-classes.


Eight FPIs have 10 or more sub-funds each, through which such segregated portfolios are maintained.