SEBI panel drafting ODI playbook for FPIs

The new ODI framework is now scheduled to kick in from November 17, after being extended from the earlier May 17 deadline

A working group set up by the Securities and Exchange Board of India (SEBI) is drafting a standard operating procedure (SOP) to implement tighter norms on offshore derivative instruments (ODIs) issued by foreign portfolio investors (FPIs), according to sources aware of the matter.

The SOP, expected to be finalised and sent for SEBI’s approval in August, will outline the conditions, exemptions, onboarding processes, timelines, and disclosure formats to be followed by ODI-issuing FPIs, custodians, and repositories, a source said.

The new ODI framework is now scheduled to kick in from November 17, after being extended from the earlier May 17 deadline. It requires enhanced disclosures from both ODI subscribers and FPIs maintaining segregated portfolios.

Disclosure Mandate

SEBI has mandated that ODI subscribers disclose detailed ownership information, up to the level of natural persons, if they meet either of the following criteria: their equity ODI positions account for 50 percent or more of securities linked to a single Indian corporate group, or their total equity positions in Indian markets exceed ₹25,000 crore.

If these thresholds are breached, dual reporting will be mandated — one from the designated depository participant (DDP), and another from the ODI issuer. The SOP will standardise reporting formats to avoid double counting and to aid effective group monitoring, another source said.

FPIs will be required to obtain a separate registration for ODIs from its designated depository participant and be required to add the suffix “ODI” under the same PAN.

Exemption review

Certain Category I FPIs, such as sovereign investors, public retail funds (PRFs), and ETFs with less than 50 percent exposure to Indian equities, are largely exempt from the new disclosure norms. However, the panel is deliberating whether these entities should continue enjoying a 90-day exemption from monitoring — especially when the subscriber invests via multiple ODI issuers for the first time.

To enable better tracking, the group has proposed that all ODI subscribers be assigned a universal identifier, like the Legal Entity Identifier (LEI). This will trigger a system alert at the depository in cases of repeat subscriptions, the source said.

The panel has remained in close touch with SEBI and ODI issuers during the SOP drafting process, ironing out concerns and fine-tuning implementation mechanics, sources said.

SEBI has also barred ODIs from being linked to derivatives or hedged using derivatives in India. All ODIs must now be linked to cash market securities and be fully and directly hedged on a one-to-one basis.

Published on June 23, 2025