The foreign institutional investors (FIIs) would not be allowed to acquire fresh positions in the cash or derivatives market with effect from 1st October.

The Securities and Exchange Board of India (SEBI) has cleared that the investors would be allowed to continue their current holdings or to rewind the holdings.

In the month of April of this year the SEBI had asked the FIIs in a circular to ensure that their structures were broad based so that they could not be used for round tripping, where the funds originating from Indian shores would come as foreign investments.

To consider a fund as a broad based the fund needs to have a minimum number of 20 investors with none of them holding more than 49% of the total shares of the fund.

According to the experts there are such structures which could be used as round tripping facilities.

Meanwhile the legal experts say most of the funds have compiled with the regulations only after the circular of SEBI earlier in this year. A list of non complaint institutions is to be made and that will be put in the website of SEBI.