INDIA INX

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Foreign Portfolio Investor (FPI) FAQ

FPI stands for Foreign Portfolio Investor. In India, the term "Foreign Portfolio Investor" refers to FIIs or their sub-accounts, or qualified foreign investors (QFIs)

Under the SEBI FPI Regulations, 2014, Foreign Institutional Investors (FIIs), Sub Accounts (SA) and Qualified Foreign Investors (QFIs) were merged into a single category, referred to as FPIs.

For more information on FPI, please refer at the following links:
http://www.sebi.gov.in/sebi_data/faqfiles/jan-2017/1485858321711.pdf
https://www.fpi.nsdl.co.in/Static/FAQ.aspx
FPIs are segregated into two categories based on SEBI FPI Regulations, 2019

Category I

(i)Government and Government related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies including entities controlled or at least 75% directly or indirectly owned by such Government and Government related investor(s);

(ii)Pension funds and university funds;

(iii)Appropriately regulated entities such as insurance or reinsurance entities, banks, asset management companies, investment managers, investment advisors, portfolio managers, broker dealers and swap dealers;

(iv)Entities from the Financial Action Task Force member countries 2[, or from any country specified by the Central Government by an order or by way of an agreement or treaty with other sovereign Governments,] which are –

I.appropriately regulated funds;

II.unregulated funds whose investment manager is appropriately regulated and registered as a Category I foreign portfolio investor:

Provided that the investment manager undertakes the responsibility of all the acts of commission or omission of such unregulated fund;

III.university related endowments of such universities that have been in existence for more than five years;

(v)An entity (A) whose investment manager is from the Financial Action Task Force member country and such an investment manager is registered as a Category I foreign portfolio investor; or (B) which is at least seventy-five per cent owned, directly or indirectly by another entity, eligible under sub-clause (ii), (iii) and (iv) of clause (a) of this regulation and such an eligible entity is from a Financial Action Task Force member country:
Provided that such an investment manager or eligible entity undertakes the responsibility of all the acts of commission or omission of the applicants seeking registration under this sub-clause.

Category II

Includes all the investors not eligible under Category I foreign portfolio investors such as –
  • appropriately regulated funds not eligible as Category-I foreign portfolio investor;
  • endowments and foundations;
  • charitable organisations;
  • corporate bodies;
  • family offices;
  • Individuals;
  • appropriately regulated entities investing on behalf of their client, as per conditions specified by the Board from time to time;
  • Unregulated funds in the form of limited partnership and trusts;

FPI should be:
  • A person not resident in India
  • A resident of a country whose securities market regulator is a signatory to International Organization of Securities Commission's (IOSCO) Multilateral Memorandum of Understanding (Appendix A Signatories) or is signatory to bilateral Memorandum of Understanding with the SEBI;
  • Resident of a country whose Central Bank is a member of Bank of International Settlements (BIS) in case of Bank applicant;
  • Legally permitted to invest in securities outside its home country;
  • Authorized by its Constitution documents / agreement to invest on its own behalf or on the behalf of its clients;
  • A fit and proper person based on the criteria specified by SEBI; and
  • Grant of certificate to the applicant is in the interest of the development of securities market.
  • FPI should also have sufficient experience, good track record, is professionally competent, financially sound and has a generally good reputation of fairness and integrity
FPIs can trade on the following products which are currently being offered at India INX

  • Equity Index Futures & Options
  • Equity Index Futures & Options
  • Commodity Futures & Options
  • Global Currency Futures & Options
Yes, Sebi vide circular no. SEBI/HO/CDMRD/DMP/CIR/P/2017/106 Dtd. September 26, 2017 has allowed FPIs to participate in commodity derivatives contracts traded exclusively in exchanges set up at IFSC (International Financial Services Centre). India International Exchange is the 1st exchange set up at IFSC.

http://www.sebi.gov.in/legal/circulars/sep-2017/participation-of-foreign-portfolio-investors-fpis-in-commodity-derivatives-in-ifsc_36081.html
For complete list of products, please refer at the following link:
https://www.indiainx.com/static/productsnapshot.aspx
Following are the benefits which a FPI can avail while trading in India International Exchange:
  • NO Security Transaction Tax (STT)
  • NO Commodity Transaction Tax (CTT)
  • NO Long Term Capital Gain (LTCG) tax
  • NO Stamp duty
  • 22 hours access - opportunity to react to change through investment / hedge / arbitrage across globe and asset class
  • Avoid currency risk (transaction and settlement in USD)
  • Competitive pricing compared to leading global exchanges
  • Capital conservation – single market access across products with cross margin benefits available at India INX
  • Comprehensive price and transaction data available real time
Yes, India International Exchange provides Direct Market Access (DMA) to FPIs

SEBI, vide circular no. MRD/DoP/SE/Cir-7/2008 dated April 03, 2008 introduced Direct Market Access (DMA). Further, SEBI vide circular no. MRD/DoP/SE/Cir-03/2009 dated February 20, 2009 permitted institutional investors to use DMA through their Investment Managers also.

Please refer to the below link for more information
http://www.sebi.gov.in/sebi_data/attachdocs/1343901076513.pdf
Yes, India has a DTAA with almost 88 countries. All the DTAA related benefits which FPIs are availing in Indian based exchanges will also be applicable for their trading in India International Exchange.
For the list of the countries, India is having DTAA with, please refer at the following link:
https://www.incometaxindia.gov.in/Pages/international-taxation/dtaa.aspx

FPI can approach any of the member of India International Exchange for trading. The list of Members are available in the following link:
https://www.indiainx.com/markets/DirectoryMembers.aspx
No, the role of the local custodian is only to monitor compliance for their respective FPIs. As FPIs shall be required to ensure clear segregation of funds and securities, such FPIs shall keep their respective custodians informed about their participation in IFSC.

Clearing member of the India ICC will be able to clear the trades done by FPI

For more information please refer Sebi Circular at the following link:
http://www.sebi.gov.in/legal/circulars/jan-2017/guidelines-for-participation-functioning-of-eligible-foreign-investors-efis-and-fpis-in-international-financial-services-centre-ifsc-_33955.html
No, only the Unique Client Code (UCC) of the FPI will have to be uploaded by the member of India INX before commencing of trading on behalf of FPI

For more information please refer Sebi Circular and India INX circular at the following links:
http://www.sebi.gov.in/legal/circulars/jul-2017/guidelines-for-participation-functioning-of-eligible-foreigninvestors-efis-and-fpis-in-ifsc-amendment_35287.html

https://www.indiainx.com/circulars/20170113-5/20170113-5.pdf
Currently only derivatives are available on India INX and it is settled in cash. So there is no requirement of opening a Demat account
All the contracts listed in India INX are in USD and settlements are also being done in USD. So an FPI don't have to worry about fluctuation in INR, which is the case in Indian domestic exchanges
FPI can remit fund via SWIFT from their existing Bank account to the bank account of the Trading Member / Clearing Member of India International Clearing Corporation (India ICC) which will be at Gift IFSC
On the basis of the request from FPI, India INX Trading Member / India ICC Clearing Member, will remit the fund via SWIFT from their bank account operated at Gift IFSC to the bank account of the FPI. Member will only transfer the fund to the bank account from which they had received the margin from the FPI
Yes, all the Prevention of Money Laundering Act (PMLA) guidelines are strictly required to be followed by the member while on boarding the FPI as a client on India International Exchange
No, there is no capital account restriction applicable at the exchanges operating in International Financial Services Centre (IFSC)
Yes, Singapore International Arbitration Centre (SIAC) has their presence in International Financial Services Centre (IFSC)