Debt Allocation Mechanism for FII

Posted: 24/11/2012 in Circulars, SEBI
Tags: , , ,

Debt Allocation Mechanism for FII

CIRCULAR, CIR/IMD/FIIC/ 22/2012, dated November 07, 2012

To

All Foreign Institutional Investors

through their designated Custodians of Securities

1. SEBI  vide  circular  CIR/IMD/FIIC/1/2012  dated  January  03,  2012  had  provided  the  facility of  re-investment  up  to  two  years  from  the  date  of  the  circular  or  to  the  extent  of  twice  the size  of  the  debt  portfolio,  to  those  FIIs  and  sub-accounts  that  had  already  acquired  limits and  /or  invested  in  debt  in  the  manner  prescribed  in  the  said  circular.  With  a  view  to provide  operational  flexibility,  beginning  January  01,  2014,  it  has  been  decided  that  the FIIs/  Sub-Accounts  can  re-invest  during  each  calendar  year  to  the  extent  of 50%  of  their debt holdings at the end of the previous calendar year.

2. In partial modification to para 6.1 of circular CIR/IMD/FIIC/18 /2010 dated November 26, 2010, it has been decided that the time period for utilization of the Government debt limits (for both old and long term limits) allocated through bidding process shall be 30 days while the time period for utilization of the corporate debt limits (for both old and long term infra limits) allocated through bidding process shall be 60 days.

3. Further, in partial modification to para 4 of circular CIR/ IMD/ FII&C/ 15/ 2012 dated June 26,  2012,  it  has  been  decided  that  FII/sub-accounts  may  avail  limits  in  the  Corporate Debt Long  Term  Infra  category  without  obtaining  SEBI  approval  till  the  overall  FII investments reaches  90%  (ninety  percent),  after  which  the  auction  mechanism  shall  be initiated  for allocation of remaining limits. SEBI will put in place a mechanism to monitor the utilization of the limit.

This  circular  is  issued  in  exercise  of  powers  conferred  under  SEBI  Section  11  (1)  of  the  Securities and  Exchange  Board  of  India  Act,  1992,  to  protect  the  interests  of  investors  in securities and to promote the development of, and to regulate the securities market.

A copy of this circular is available at the web page ˝F.I.I.”  on our website www.sebi.gov.in.  The custodians are requested to bring the contents of this circular to the notice of their FII clients.

Click here to download the complete text of the above Circular in PDF Format- CIRCULAR, CIR/IMD/FIIC/ 22/2012, dated November 07, 2012.

Source: Securities and Exchange Board of India.

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