INSUBCONTINENT EXCLUSIVE:
Five multinational banks, handling funds and securities of foreign portfolio investors (FPIs), have alerted the Indian capital market
regulator that several foreign funds, caught in the Covid-19 situation, will be unable to renew their licence unless some of the rules are
changed.
In a joint letter to the Securities - Exchange Board of India (Sebi), Deutsche Bank, Citi, JP Morgan Chase, Standard Chartered and
registering new funds, and opening bank accounts.
A fund whose registration is not renewed is disallowed from taking fresh positions.
Since
most funds and asset managers have activated their business continuity plan, which involves working from home or alternate locations, they
let them process fully-executed scanned documents, upload the images with record-keeping agencies as part of KYC regulations, and
temporarily adopt a similar method in carrying out due diligence of high-risk clients.
Such flexibility should also be extended to issuer
trade on Indian stocks and indices that serve as underlier.
This, they feel, should be allowed for at least three months or till the time
the situation stabilises.
Custodian banks have told Sebi that in the absence of these relaxations, there is a risk that FPI renewals,
registrations and account opening may be severely impacted.
Over the years, Sebi has reviewed KYC and other regulations to have a greater
clarity on the nature of overseas investors, the ultimate beneficial owners and the actual holders of PNs
According to a source, the custodians have assured that the relaxed regulation would not be used as a default process but invoked on
specific requests of funds and custodians would process only applications where the feel the email or the sender is authentic while carry
out other regulatory and anti-money laundering checks as per existing rules.
REDUCE TRADING HOURS: BROKERSMeanwhile, small teams of dealers
handling trades of FPIs and local institutions in various brokerages are attending office to execute orders
While Sebi has allowed employees of brokers to work from alternate locations, only dealers handling retail clients are working from
There are call drops, internet is slow, and many young dealers do not have a landline at home.
disputes may crop up later
regulator and the government to reduce trading hours
Probably because they do not want a situation where only FPIs hedge in Singapore (where Nifty is traded) while local investors feel helpless
However, reduced market hours will help employees who have to work about 2-4 hours after the trading is over to process various reporting