CIRCULAR,
CIR/IMD/FIIC/ 09/ 2014, dated 28th April, 2014
To,
All Designated
Depository Participants through Depositories
1. The SEBI
(Foreign Portfolio Investors) Regulations, 2014 ("the Regulations")
have been notified on January 07, 2014. Pursuant to the implementation of
Foreign Portfolio Investor ("FPI") regime, SEBI approved Designated
Depository Participants ("DDPs") would grant registration to FPIs on
behalf of SEBI and also carry out other allied activities in compliance with
Regulations and other guidelines, circulars, issued thereunder.
2. In order to
ensure proper functioning of the FPI regime, it is imperative that DDPs should have
adequate infrastructure facilities and appropriate systems and controls in
place. Accordingly, it has been decided as follows:
2.1. Segregation of activities: Every
DDP shall maintain arms length distance from other businesses carried out by it
such that:
a) the activities relating to its
business as DDP is segregated from all other activities and is not influenced
by its other activities;
b) its officers and employees
engaged in carrying out functions of DDPs shall not be engaged in any other
activity carried on by it and shall directly report to its chief compliance
officer.
2.2. Infrastructure: Every DDP
shall have necessary infrastructure, including adequate office space, adequate
and competent manpower and computer systems capability required to discharge
its activities as DDP in compliance with Regulations and other guidelines,
circulars, issued thereunder.
2.3. Manual: Every DDP shall
have a complete manual, setting out the systems and procedures to be followed
for the effective and efficient discharge of its functions as DDPs.
2.4. Monitoring of systems and controls:
Every
DDP shall have adequate mechanisms for the purposes of reviewing, monitoring
and evaluating its controls, systems, procedures and safeguards. Further the
DDPs shall carry out internal audits of their systems.
3. Submission
of periodic reports to SEBI: Every DDP shall submit periodic reports as enclosed
in the Annexure A to SEBI and such other reports as may be required by SEBI.
4. The provisions
of this circular would be applicable upon commencement of the Foreign Portfolio
Investor ("FPI") regime.
5. This circular
is issued in exercise of powers conferred under 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.
6. The circular is
available on SEBI website at www.sebi.gov.in
under the categories "Legal framework" and "information for -
FII".
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