The Securities and Exchange Board of India (SEBI) has allocated a separate limit of ₹50 billion (US$768 million) to foreign portfolio investors (FPIs) for long positions in interest rate futures (IRFs) through a circular issued on 8 March.
The circular follows an August 2017 statement on developmental and regulatory policies, where the Reserve Bank of India proposed to allocate a separate limit for this amount to FPIs under the SEBI (Foreign Portfolio Investors) Regulations, 2014, in order to facilitate market development.
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To cover the calculation of the separate limit, the circular states that for each IRF instrument, the position of FPIs with a net long position will be aggregated. FPIs with a net short position in the instrument will not be affected. No FPI can acquire a net long position exceeding ₹18 billion at any time.
To monitor the limit, the circular says stock exchanges will put in place the necessary mechanisms for monitoring and enforcement, and will jointly publish/disseminate daily on their websites the aggregate net long position in IRF of all FPIs taken together at the end of the day. Once 90% of the limit is utilized, stock exchanges will be alerted and publish the available limit on their websites daily.
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