SEBI Circular on expanding the framework of OFS of Shares through Stock Exchange Mechanism

Expanding the framework of Offer for Sale (OFS) of Shares through Stock Exchange Mechanism

Circular, CIR/MRD/DP/24/201, dated 08th August, 2014

1. Comprehensive guidelines on sale of shares through Offer for Sale mechanism were issued vide circular no CIR/MRD/DP/18/2012 dated July 18, 2012. These guidelines have been modified vide circulars dated CIR/MRD/DP/04/2013 dated January 25, 2013 and CIR/MRD/DP/17/2013 dated May 30, 2013.

2. While the OFS mechanism has been successfully used to divest promoter stake, market feedback indicated that there is a need to take measures to encourage retail participation in OFS, enable other large shareholders to use the OFS mechanism and expand the universe of companies to use this framework.

3. Accordingly, the OFS framework shall be modified as under.

3.1. The OFS mechanism shall be available to top 200 companies by market capitalization in any of the last four completed quarters.

3.2. Any non-promoter shareholder of eligible companies holding at least 10% of share capital may also offer shares through the OFS mechanism.

3.3. In case a non-promoter shareholder offers shares through the OFS mechanism, promoters/ promoter group entities of such companies may participate in the OFS to purchase shares subject to compliance with applicable provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

3.4. Minimum 10% of the offer size shall be reserved for retail investors. For this purpose, retail investor shall mean an individual investor who places bids for shares of total value of not more than Rs.2 lakhs aggregated across the exchanges. If the cumulative bid value across exchanges exceeds Rs.2 lakhs in the retail category, such bids shall be rejected.

3.5. Individual retail investors shall have the option to bid in the retail category and the general category. However, if the cumulative bid value of such investors exceeds Rs.2 lakhs, the bids in the retail category shall become ineligible.

3.6. The cut off price i.e. the lowest price at which the entire offer gets sold, shall be determined based on all valid bids. The cut off price shall be determined separately for bids received in the retail category and for bids received in the non-retail category.

3.7. Upon determining the cut-off price, the offer size reserved for retail investors shall be allocated to eligible bids of retail investors. Any unutilized portion shall be offered to non-retail category of investors. In case of excess demand in retail category at the cut-off price, allocation shall be on proportionate basis.

3.8. Indicative price for retail and non-retail portion shall be displayed separately.

3.9. Seller shall announce intention of sale of shares latest by 5 pm on T-2 day (T day being the day of the OFS) to the stock exchange. Stock exchanges shall inform the market immediately upon receipt of notice.

3.10. In case of disclosure of the floor price, seller shall disclose the floor price latest by 5 pm on T-1 day to the stock exchange. Stock exchanges shall ensure that the same is informed to the market immediately.

3.11. Seller may offer discount to retail investors. The details of discount and percentage of reservation for retail investors shall be disclosed upfront in the notice of OFS to the exchange.

3.12. Discount to retail investors may be offered as follows:

Multiple Clearing price OFS-

3.12.1. Retail investors may be allocated shares at a discount to the cut-off price determined in the retail category, irrespective of the bid price entered by them. Or

3.12.2. Retail investors may be allocated shares at a discount to the bid price entered by them.

Single clearing price OFS-

3.12.3. Retail investors shall be allocated shares at a discount to cut off price determined in the retail category.

3.13. In case of both of the above methodologies, the discounted price which shall be the final allocation price to the retail investors may be below the floor price.

4. Para 1, 2, 5 and para 7 of OFS circular dated July 18, 2012 stand accordingly modified. All other conditions for sale of shares through OFS framework contained in the circulars CIR/MRD/DP/18/2012 dated July 18, 2012, CIR/MRD/DP/04/2013 dated January 25, 2013 and CIR/MRD/DP/17/2013 dated May 30, 2013 remain unchanged.

5. Stock Exchanges are advised to:

5.1. take necessary steps and put in place necessary systems for implementation of above within three weeks from the date of this circular.

5.2. take steps to implement para 3.9 and 3.10 above with immediate effect.

5.3. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.

5.4. bring the provisions of this circular to the notice of the member brokers of the stock exchange to also to disseminate the same on their website.

6. This circular is being 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.

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Source: Securities and Exchange Board of India.

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Monitoring of Compliance by Stock Exchanges

Circular, CIR/CFD/DIL/4/2014, dated 01st August, 2014

Monitoring of Compliance by Stock Exchanges

1. SEBI, vide Circular No. CIR / MRD / DSA / 31 /2013 dated September 30, 2013 and Circular No. CIR / CFD / POLICYCELL / 13 / 2013 dated November 18, 2013 advised stock exchanges to, inter-alia, put in place a system to monitor and review the compliance of listing conditions by listed companies. Clause 5.2 of the Circular dated November 18, 2013 also advised stock exchanges to devise framework to detect any non-compliance / violation of the applicable laws.

2. SEBI vide circular dated April 17, 2014 has also made certain amendments to the Clause 49 of the Listing Agreement. The amended Clause 49, inter-alia, provides for Principles of Corporate Governance to be mandatorily complied with by listed companies.

3. The Principles of Corporate Governance, inter-alia, provide that shareholders should have opportunity to participate effectively and vote in general shareholder meetings. These principles also require companies to facilitate effective shareholder participation and exercise of ownership rights and require that company procedures shall not make it unduly difficult or expensive to cast votes.

4. In this regard, it is observed that some listed companies belonging to a common group have held their AGMs, with a time gap of 15 minutes between two AGMs. It is also observed that these companies were formed out of demergers and had 80% common shareholding thereby leaving only 15 minutes each for the common shareholders to attend the AGM of these companies.

5. It is observed that allocation of 15 minutes for conducting AGM of a public listed company having more than one lakh shareholders does not appear to be adequate enough to facilitate a constructive discussion on various matters transacted at the AGM. Such a practice affects the rights of investors to seek clarifications/hold discussions and prima-facie appears to be prejudicial to the interest of the investors.

6. In view of the above, Clause 5.2 of the Circular dated November 18, 2013 and the provisions of the revised Clause 49 which are scheduled to take effect from October 01, 2014, all recognised stock exchanges are advised to step up and equip their monitoring framework to identify and monitor such practices and to ensure that requirements laid down by Principles of Corporate Governance in the revised Clause 49 of the Listing Agreement are followed in letter and spirit.

7. This circular is issued in exercise of the powers conferred under Section 11 read with Section 11A of the Securities and Exchange Board of India Act, 1992.

8. Stock Exchanges are advised to ensure compliance with this circular.

9. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework” and “Issues and Listing”.

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Clarification on position limits of domestic institutional investors for currency derivatives contracts

Circular, CIR/MRD/DP/23/2014, dated 24th July, 2014

Clarification on position limits of domestic institutional investors for currency derivatives contracts

SEBI vide circular no. CIR/MRD/DP/20/2014 dated June 20, 2014 had revised position limits for the market participants in the permitted currency pairs.

2. In this regard, it is clarified that domestic institutional investors shall have position limits as mentioned at para 12.(a) of the SEBI circular CIR/MRD/DP/20/2014 dated June 20, 2014, subject to such domestic institutional investors being permitted by their respective sectoral regulators to participate in the currency derivatives segment.

3. It is further clarified that banks, whether participating in the currency derivatives segment as clients or as stock brokers, shall be guided by the provisions mentioned at para 3 of the RBI A.P. (DIR Series) Circular no. 147 dated June 20, 2014 while trading in the currency derivatives segment.

4. Stock Exchanges and Clearing Corporations are directed to:

(a) take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant bye-laws, rules and regulations.

(b) bring the provisions of this circular to the notice of the stock brokers / clearing members and also disseminate the same on their website;

(c) communicate to SEBI the status of implementation of the provisions of this circular.

5. This circular is being 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.

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Source: Securities and Exchange Board of India.

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Change in Government Debt Investment Limits

Circular, CIR/IMD/FIIC/ 17/2014, dated 23rd July, 2014

All Foreign Portfolio Investors

through their Designated Depository Participants

The Depositories (NSDL and CDSL)

1. Present debt investment limits available for FPI investments in Government securities (G-Secs) include a USD 20 billion limit for all FPIs and another USD 10 billion limit for Long Term FPIs. While the USD 20 billion limit has been fully utilized, the USD 10 billion limit has been utilized only up to 22.86%.

2. Therefore, in partial modification of para 5 of the SEBI circular CIR/IMD/FIIC/8/2014 dated April 07, 2014, it has been decided to enhance the investment limit in government securities available to all FPIs by USD 5 billion by correspondingly reducing the amount available to long term FPIs from USD 10 billion to USD 5 billion within the overall limit of USD 30 billion.

3. The incremental investment limit of USD 5 billion (INR 24,886 cr) shall be required to be invested in government bonds with a minimum residual maturity of three years. Further, all future investment against the limit vacated when the current investment by an FPI runs off either through sale or redemption shall also be required to be made in government bonds with a minimum residual maturity of three years. It is, however, clarified that there will be no lock-in period and FPIs shall be free to sell the securities (including those that are presently held with less than three years of residual maturity) to the domestic investors.

4. The Government debt investment limit shall now be as follows:

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Source:Securities and Exchange Board of India.

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Clarification and extension of deadline w.r.t circular on Guidelines on disclosures.......

Clarification and extension of deadline with respect to circular on Guidelines on disclosures, reporting and clarifications under AIF Regulations

Circular, CIR/IMD/DF/16/2014, dated July 18, 2014

All Alternative Investment Funds ("AIFs") registered with SEBI

SEBI had issued a circular No. CIR/IMD/DF/14/2014 dated June 19, 2014 on 'Guidelines on disclosures, reporting and clarifications under AIF Regulations'. In this regard, it is clarified as under:

1. The deadline for sending of annexure to the placement memorandum to the investors under clause 2(a)(iii) is extended till August 31, 2014.

2. With respect to disclosure of disciplinary history under clause 2(a)(ii), the same shall be applicable for the last 5 years and where monetary penalty is involved, in cases where such penalty is greater than Rs. 5 lakhs. With respect to disputed tax liabilities, the same shall not apply to liabilities in personal capacity of an individual. Contingent liabilities shall be as disclosed in books of accounts of the entity.

3. With respect to clause 2(b)(iii), the changes shall include modifications in terms or documents of the fund/scheme and the same may be intimated to investors and SEBI once every six months on a consolidated basis. With respect to clause 2(b)(iv), 'material' changes may be construed as changes in the fundamental attributes of the fund/scheme and the process for exit under the clause shall not apply in cases where the AIF has approval of not less than 75% of unit holders by value of their investment in the AIF with respect to sub-clauses (a) and (b).

4. With respect to clause 3(d), joint investors shall mean where each of the investor contributes towards the AIF. With respect to clause 3(g), such investee company shall hold or propose to hold not less than one project, directly or indirectly.

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Source: Securities and Exchange Board of India.

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SEBI Circular - DIS Issuance and Processing

Circular, CIR/MRD/DP/ 22 /2014, dated 04th July, 2014

Delivery Instruction Slip (DIS) Issuance and Processing

1. SEBI has vide circular no. CIR/MRD/DP/ 01 /2014 dated January 07, 2014 introduced guidelines to strengthen the supervisory and monitoring role of the depositories and their participants with respect to issuance and processing of Delivery Instruction Slips.

2. In light of the difficulties expressed by the depositories and the Depository Participants (DPs) and considering their request, it has been decided to make the circular effective from October 01, 2014.

3. Further, with regard to the provision under para 14 that DPs shall not accept old DIS for execution from a Beneficial Owner (BO) who has been issued new DIS, it is clarified that a period of one month may be given for receipt of DIS by the BOs. The DPs may accept old DIS during this transit period. Further, while issuing new DIS the DPs shall intimate the BO that old DIS cannot be used after the new DIS is received.

4. The depositories shall ensure the implementation of the above within the stipulated timelines. Other provisions of the circular would remain unchanged.

5. The Depositories are advised to:-

a) bring the provisions of this circular to the notice of their DPs and also to disseminate the same on their website; and

b) make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision as may be applicable/necessary ;

c) communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Development Report.

6. This circular is being issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 and section 19 of the Depositories Act, 1996 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.

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Source: Securities and Exchange Board of India.

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Dispatch of physical Statements to BOs having Zero Balance and Nil Transactions

Circular, CIR/MRD/DP/ 21 /2014, dated 01st July, 2014

1. SEBI had vide circular no. CIR/MRD/DP/ 22 /2012 dated August 27, 2012 introduced the facility of Basic services Demat Account (BSDA) wherein inter alia it was mandated that one annual physical statement of holding shall be sent to the Beneficial Owners (BOs) having zero balance and Nil transaction.

2. Based on the representations from the Depositories and Depository Participants, the relevant provisions of the aforesaid circular are modified as under:

Clause 5 (b) (i)

DP shall send atleast one annual physical statement of holding to the stated address of the BO in respect of accounts with no transaction and nil balance even after the account has remained in such state for one year. The DP shall inform the BO that the dispatch of the physical statement may be discontinued if the account continues to remain zero balance even after one year.

Clause 6 (a)

Accounts with zero balance and nil transactions during the year:

DP shall send atleast one annual physical statement of holding to the stated address of the BO in respect of accounts with no transaction and nil balance even after the account has remained in such state for one year. The DP shall inform the BO that if no Annual Maintenance Charge (AMC) is received by the DP, the dispatch of the physical statement may be discontinued for the account which continues to remain zero balance even after one year.

3. However, irrespective of the above, the DPs shall send electronic statement of holding to all the BOs whose email ids are registered with them. Also, if a BO requests for a physical statement, the DPs shall provide the same.

4. For the purpose of valuation of holdings in an account as provided in clause 4(b) of the aforesaid circular, it is clarified that the value of suspended securities may not be considered for the purpose of determining eligibility of demat account as BSDA.

5. The Depositories are advised to:-

a) make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately, as may be applicable/necessary;

b) bring the provisions of this circular to the notice of their DPs and also to disseminate the same on their website; and

c) communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Development Report.

6. This circular is being issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 and section 19 of the Depositories Act, 1996 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.

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Source: Securities and Exchange Board of India.

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Circular on extension of timeline for alignment of employee benefit schemes with the SEBI (ESOS and ESPS) Guidelines, 1999

Circular, CIR/CFD/POLICYCELL/3/2014, dated 27th June, 2014

SEBI Circulars No. CIR/CFD/DIL/3/2013 dated January 17, 2013, CIR/CFD/DIL/7/2013 dated May 13, 2013 and CIR/CFD/POLICYCELL/14/2013 dated November 29, 2013 - Extension of time line for alignment

1. SEBI vide circular No. CIR/CFD/DIL/3/2013 dated January 17, 2013, inter alia, made certain amendments to the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 {"SEBI (ESOS and ESPS) Guidelines, 1999"} and employee benefit schemes involving securities of the company were required to be aligned with the SEBI (ESOS and ESPS) Guidelines, 1999. The time line for alignment was subsequently extended vide aforesaid circulars dated May 13, 2013 and November 29, 2013.

2. Meanwhile, following a consultative process, SEBI Board has approved certain proposals for framing a new set of regulations concerning employee benefit schemes dealing in shares of the company. The new regulations shall come into force as and when notified.

3. In view of the above, it has been decided to modify the said circular dated November 29, 2013 to extend the time line for aligning existing employee benefit schemes with the SEBI (ESOS and ESPS) Guidelines, 1999 till the new regulations are notified. However, it is reiterated that prohibition on acquiring securities from the secondary market shall continue till the existing schemes are aligned with the new regulations to be notified.

4. This circular is being issued in exercise of the powers under Section 11 read with Section 11A of the Securities and Exchange Board of India Act, 1992.

5. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework” and “Issues and Listing”.

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Source: Securities and Exchange Board of India.

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SEBI Circular on AUM of Debt Oriented Schemes

Circular, Cir/ IMD/ DF/ 15 /2014, dated June 20, 2014

Minimum Assets under Management (AUM) of Debt Oriented Schemes

1. It has been observed that many debt oriented schemes are operating with a very low AUM. In the interest of investors, it is important that debt oriented schemes have an adequate corpus to ensure adherence to the investment objectives as stated in Scheme Information Document and compliance with investment restrictions specified under SEBI (Mutual Funds) Regulations, 1996.

2. In this regard, it has been decided that:

a) The minimum subscription amount of debt oriented and balanced schemes at the time of new fund offer shall be at least Rs. 20 crore and that of other schemes shall be at least Rs. 10 crore.

b) An average AUM of Rs. 20 crore on half yearly rolling basis shall be maintained for open ended debt oriented schemes.

c) The existing open ended debt oriented schemes shall comply with point (b) stated above within one year from the date of issue of this circular.

d) In case of breach of points (b) and (c) above, the AMC shall scale up the AUM of such scheme within a period of six months so as to comply with point (b) stated above, failing which the provisions of Regulation 39 (2) (c) of SEBI (Mutual Funds) Regulations, 1996 would become applicable.

e) The confirmation on compliance of the above shall be reported to SEBI in the Half Yearly Trustee Reports.

3. This circular is issued in exercise of powers conferred under section 11(1) of the Securities and Exchange Board of India Act, 1992, read with provisions of regulation 77 of SEBI (Mutual Funds) Regulations, 1996 to protect the interests of the investors in securities and to promote the development of and to regulate the securities market.

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Source: Securities and Exchange Board of India.

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Participation of FPIs in the Currency Derivatives segment and Position limits for currency derivatives contracts

Circular, CIR/MRD/DP/20/2014, dated June 20, 2014

The Hon’ble Finance Minister in his Budget 2013-2014 speech on February 28, 2013 had announced that “FIIs will be allowed to participate in the exchange traded currency derivative segment to the extent of their Indian rupee exposure in India”.

2. Pursuant to notification dated May 21, 2014 on Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2014, Reserve Bank of India (RBI) vide A.P. (DIR Series) Circular no. 148 dated June 20, 2014 has allowed FPIs, who are eligible to invest in securities as laid down in Schedules 2, 5, 7 and 8 of Foreign Exchange Management (Transfer or Issue of Security by a person resident outside India) Regulations, 2000, to enter into currency futures or exchange traded currency options contracts, subject to terms and conditions mentioned in the said circular. Copy of the RBI circular is enclosed for reference.

Participation of FPIs in the Currency Derivatives Segment

3. In view of the above, FPIs are permitted to trade in the currency derivatives segment of stock exchanges, subject to terms and conditions mentioned in this circular and aforesaid RBI circular.

4. Accordingly, para I.1.d. of the SEBI Circular SEBI/DNPD/Cir-38/2008 dated August 06, 2008 regarding Exchange Traded Currency Derivatives is modified as under:

Appropriate mechanisms are implemented to prevent participation in Exchange Traded Currency Derivatives of “persons resident outside India”, as defined in Section 2(w) of the Foreign Exchange Management Act, 1999, except persons allowed under regulation 5B of Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2014.

5. Within the applicable position limits specified in para 12, positions taken by the FPIs in the currency derivatives segment of a recognised stock exchange shall be subject to the following conditions:

(a) FPIs may take long as well as short positions in the permitted currency pairs upto USD 10 million / EUR 5 million / GBP 5 million / JPY 200 million, as applicable, per stock exchange without having to establish the existence of any underlying exposure.

(b) FPIs shall ensure that their short positions at a stock exchange across all contracts in a permitted currency pair do not exceed USD 10 million / EUR 5 million / GBP 5 million / JPY 200 million, as applicable. In the event a FPI breaches the short position limit, stock exchanges shall restrict the FPI from increasing its existing short positions or creating new short positions in the currency pair till such time FPI complies with the said requirement.

(c) To take long positions in the permitted currency pair in excess of USD 10 million / EUR 5 million / GBP 5 million / JPY 200 million, as applicable, FPIs shall be required to have an underlying exposure in Indian debt or equity securities, including units of equity/debt mutual funds.

6. Primary onus for ensuring compliance with the above provisions shall rest with the FPI.

7. With regard to enabling monitoring of positions of FPIs as per the provisions of the RBI A.P. (DIR Series) Circular no. 148 dated June 20, 2014, the following shall be implemented by the clearing corporations and the custodians of securities of the FPIs:

(a) The clearing corporation shall provide details on the FPI’s day-end and day’s highest open positions at end of day to the custodians of securities of the FPI.

(b) The custodian of securities of the FPI shall aggregate the positions taken by the FPI on the currency derivatives segments of all the stock exchanges and forward such details to the designated bank of the FPI as defined at regulation 2(1)(e) of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014. The custodian of securities of the FPI shall also provide the market value of applicable underlying exposure of the FPI to the designated bank of the FPI.

Participation of domestic clients in the currency derivatives segment

8. RBI vide A.P. (DIR Series) Circular no. 147 dated June 20, 2014 has revised the participation requirements for the domestic participants in the currency derivatives segment. Copy of the RBI circular is enclosed for reference.

9. Accordingly, within the applicable position limits specified in para 12, positions taken by the domestic clients shall be subject to the following conditions:

(a) Domestic clients may take long or short positions in the permitted currency pairs upto USD 10 million / EUR 5 million / GBP 5 million / JPY 200 million, as applicable, per stock exchange without having to establish the existence of any underlying exposure.

(b) Domestic clients may take positions in the permitted currency pairs in excess of USD 10 million / EUR 5 million / GBP 5 million / JPY 200 million, as applicable, subject to the conditions specified the RBI A.P. (DIR Series) Circular no. 147 dated June 20, 2014.

10. Stock brokers shall comply with the requirements mentioned in the RBI A.P. (DIR Series) Circular no. 147 dated June 20, 2014 while dealing with domestic clients and shall bring to the notice of their clients the requirements specified in this circular and the aforementioned RBI circular.

11. The primary onus of complying with the relevant provisions of the RBI A.P. (DIR Series) Circular no. 147 dated June 20, 2014 shall rest with the client and in case of any contravention, the client shall render itself liable to any action that may be warranted by RBI as per the provisions of Foreign Exchange Management Act, 1999 and Regulations, Directions, etc. framed thereunder.

Position limits in the permitted currency pairs

12. In modification to position limits specified vide SEBI circular CIR/MRD/DP/22/2013 dated July 08, 2013 for USD-INR contracts and in partial modification to the position limits specified for EUR-INR, GBP-INR and JPY-INR contracts vide SEBI circular SEBI/DNPD/Cir-52/2010 dated January 19, 2010, the revised position limits per stock exchange shall be as follows:

(a) Position limits for Stock Brokers (bank and non-bank), Category I & II FPIs: The position limits shall be as given in the table below.

Currency Pair	Position limits
USD-INR	Gross open position across all contracts shall not exceed 15% of the total open interest or USD 100 million, whichever is higher.
EUR-INR	Gross open position across all contracts shall not exceed 15% of the total open interest or EUR 50 million, whichever is higher.
GBP-INR	Gross open position across all contracts shall not exceed 15% of the total open interest or GBP 50 million, whichever is higher.
JPY-INR	Gross open position across all contracts shall not exceed 15% of the total open interest or JPY 2000 million, whichever is higher.

(b) Proprietary positions of non-bank stock brokers: Proprietary positions of non-bank stock brokers shall be subject to position limits mentioned at para 12(c).

(c) Position limits for Clients and Category III FPIs: The position limits shall be as given in the table below.

Currency Pair	Position limits
USD-INR	Gross open position across all contracts shall not exceed 6% of the total open interest or USD 10 million, whichever is higher.
EUR-INR	Gross open position across all contracts shall not exceed 6% of the total open interest or EUR 5 million, whichever is higher.
GBP-INR	Gross open position across all contracts shall not exceed 6% of the total open interest or GBP 5 million, whichever is higher.
JPY-INR	Gross open position across all contracts shall not exceed 6% of the total open interest or JPY 200 million, whichever is higher.

13. Stock exchanges shall impose appropriate penalties for violation of position limits by stock brokers / FPIs / domestic clients.

14. In case of positions taken to hedge underlying exposure, the position limit linked to open interest shall be applicable at the time of opening a position. Such positions shall not be required to be unwound in the event a drop of total open interest in a currency pair at a stock exchange. However, participants shall not be allowed to increase their existing positions or create new positions in the currency pair till they comply with the position limits.

15. All other conditions as specified vide earlier SEBI Circulars shall remain unchanged. Stock exchanges / Clearing corporations may specify additional safeguards / conditions, as deemed fit, to manage risk and to ensure orderly trading.

16. Depositories are directed to forward this circular to the DDPs, who shall in turn bring the contents of this circular to the notice of the FPIs registered with them.

17. Stock Exchanges and Clearing Corporations are directed to:

(a) take necessary steps to put in place systems for implementation of the circular by June 27, 2014, including necessary amendments to the relevant bye-laws, rules and regulations.

(b) bring the provisions of this circular to the notice of the stock brokers / clearing members and also disseminate the same on their website;

(c) communicate to SEBI the status of implementation of the provisions of this circular.

18. This circular is being 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.

Enclosures:

(i) Reserve Bank of India A.P. (DIR Series) Circular no. 148 dated June 20, 2014 on ‘Risk Management and Inter-bank Dealings: Guidelines relating to participation of Foreign Portfolio Investors (FPIs) in the Exchange Traded Currency Derivatives (ETCD)’.

(ii) Reserve Bank of India A.P. (DIR Series) Circular no. 147 dated June 20, 2014 on ‘Risk Management and Inter-bank Dealings: Guidelines relating to participation of Residents in the Exchange Traded Currency Derivatives (ETCD) market’.

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Source: Securities and Exchange Board of India.

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