Domestic market regulator Securities and Exchange Board of India (Sebi) last month directed the cancellation of registrations of 26 foreign portfolio investors (FPIs) from those jurisdictions that aren’t signatories to a multilateral framework for cooperation in securities regulation, said a Mint report.
The majority of them are based in Canada and the funds affected by Sebi’s move include pension funds, trusts and insurance companies. “They have been told to shut down their funds and unwind their positions within the next six months,” Mint quoted a source.
“These are good funds, and Canada is a safe jurisdiction. This narrow view taken by the regulator is restricting not just existing fund flows but also hindering fresh registrations from certain Canadian provinces,” the source said.
There are a total of 509 funds investing in India from Canada, according to the Sebi website. “Such letters have been issued to funds whose registration was up for renewal in 2022 and came from non-eligible jurisdictions,” said the report, quoting the source.
The matter relates to Sebi’s introduction of new foreign institutional investors (FIIs) rules in 2014. As per the changed norms, FPIs have to be a resident of a jurisdiction whose securities regulator is a signatory to the International Organization of Securities Commissions (IOSCO) or have a bilateral understanding with Sebi.
The regulator’s move comes at a time FPIs have pulled out upwards of ₹38,000 crore in February from Indian markets.
