INSUBCONTINENT EXCLUSIVE:
have.
Capital market regulator Securities - Exchange Board of India (Sebi) has recently alerted custodians that it has come across instances
where such trades have taken place.
In an email to foreign and local custodians, which function as a vital link between offshore funds and
the Indian stock market, Sebi has told them to adhere to the regulatory guidelines which bar FPIs from such shortselling in the Indian
person familiar with the subject told ET.
Simply put, one such trade can be where an FPI buys stock on Monday (under the existing T plus 2
Sebi spokesperson went unanswered till the time of going to press.
The Sebi communication, which came a fortnight ago, closely follows the
operational guidelines released by the regulator on November 5 for FPIs and designated depository participants.
The guidelines reiterate the
Borrowing (SLB) or any other framework specified by the Board
mechanism, introduced about a decade ago, had permitted FPIs to sell borrowed shares
Prior to that, short-selling was disallowed in all forms
initiated the foreign exchange conversion and the process to arrange funds
Under the rules, a custodian cannot confirm a sale trade even after 1 pm by when the buy trade has been confirmed
Once confirmed, the obligation to settle the trade shifts from the stock broker to the custodian.
If an FPI does a simultaneous buy and sell
trade, the transactions have to be confirmed separately by a custodian
Thus, unlike local traders, offshore investors are not allowed intra-day netting of trades which does not result in delivery obligation.
As
(FPO), rights issue, private placement or shares received through corporate actions such as merger or demerger
capital on a fully diluted basis.
