Foreign investors barred from interest rate futures exposure

Foreign investors barred from interest rate futures exposure

With foreign investors' exposure to the government debt reaching over 97 per cent of the permitted limit of $25 billion, they have been asked not to take any fresh investment position in the interest rate futures market.

In separate circulars issued on Thursday morning, the National Stock Exchange and BSE said the total foreign investments in government debt securities (through the auction route) had reached Rs 1,21,224 crore.

This is 97 per cent of the permitted limit of $25 billion (Rs 124,432 crore, the exchanges said, citing data from National Securities Depository Limited.

The foreign investments include those of FIIs (foreign institutional investors), FPIs (foreign portfolio investors) and QFIs (qualified foreign investors).

The position limits of these in exchange-traded interest rate futures (IRFs) are monitored by the exchanges on the direction of the Securities and Exchange Board of India.

Sebi has put in place a mechanism for monitoring and enforcing limits of FIIs in government securities and corporate bonds by directing depositories to disseminate information regarding the total FII investment values in such securities.

The mechanism requires stock exchanges to inform the depositories about the aggregate gross long positions in IRFs of all FIIs put together at the end of every trading session.

As and when the total cash and IRF of all FIIs reaches 85 per cent of the permissible limit, the depositories are required to inform RBI, Sebi and the stock exchanges.

Once 90 per cent of limit is utilised, FIIs are not allowed to further increase their long position in IRF till the time the overall long position of FIIs in cash and IRF comes below 85 per cent of existing permissible limits in the government bond segment.

Business Standard
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Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com


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