The SEBI’s meeting with foreign institutional investors (FIIs) had cleared the fundamental point that the attempts to make out unknown investments via participatory notes (PNs) will carry on till the last dollar that gets in can be lined back.
But by showing fresh FIIs in double pace, SEBI is also trying to turn away an unwinding shock for the stock markets.

M Damodaram, SEBI chairman, said, “We will seek to expedite the process of registration, as well as see what other categories of investors can be included as eligible entities in the registration process.”

While explaining the prompt registration procedure, Mr. Damodaram stated that 16 foreign institutional investors (FIIs) were filed on Monday itself.

The financial instruments used by foreign investors not filed with SEBI to invest in Indian companies’ shares are known as participatory notes (PNs).

Mr. Damodaram stated that SEBI had disclosed a discussion paper on October 16 that had suggested restrictions on P-notes, which are based on derivatives, and disallowing FIIs sub-accounts from issuing participatory notes (PNs).

The SEBI’s board members are due to assemble on October 25 when it is likely to resolve the issue rules, and it will also give break on registration of FIIs proprietory sub-accounts.

It also stated that the sub accounts can apply for a licence if they are meant for their own trading, while those that don’t apply will be banished.

Proprietary sub-accounts wanting to shift to FIIs have been ordered to send out a letter of intent to SEBI within 24 hours of the videoconference that held on Monday pointing they would apply to change.

Mr. Damodaram said that they should get the completed application to the SEBI within a week’s time.

Damodaran also told that the norm that capitalists must have been in operation for at least a year may be considered.

The 10 representatives of leading FIIs, who attended the meeting in the SEBI head quarters included UBS, Citibank, Deutsche, Merill Lynch, Goldman Sachs, HSBC, Morgan Stanley and CLSA Asia Pacific Markets, whereas other FIIs took part in the discussion through video conferencing.

“One big business strategy of our clients has been impacted. There will be some quikeffect on our business to that extent,” one of them said after the discussion.