Mumbai: In a late development, capital market regulator Securities and Exchange Board of India (Sebi) on Thursday declared 197 foreign institutional investors (FIIs) and 342 sub-accounts as non-compliant entities. Funds of ABN AMRO Bank, Standard Chartered and Bank of New york are among these entities which are banned from taking fresh positions in the market. Sub-accounts of Aberdeen Asset and Abhudhabi Investment Authority were also named non-compliant. Non-compliant and sub-accounts could either retain their current position, sell or unwind.
“With effect from 1 October, the FIIs and sub-accounts that have not complied (with the norms) will not be permitted to take fresh positions in the cash and derivatives markets, while they can retain their current positions or sell off/unwind,” Sebi said in a circular released on Wednesday. The regulator has also decided to upload the list of non-compliant entities on its website.
On 15 April, Sebi had asked all FIIs, structured as multi-class vehicles (MCV), to have at least 20 individual investors, if they are maintaining a segregated portfolio for each class of shares, by 30 September. An MCV is a structured entity where investors in each class have different contractual agreement with sub-accounts in regards to investment strategies, liabilities and fund manager.