SEBI Ends Practice of FIIs Investing for Individuals

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Oct. 5 – The Securities and Exchange Board of India recently ended the practice of foreign institutional investors investing money collected from a single or few investors in stocks.

From October 1, FIIs will have to register under a structure conforming to the new norms.
The new guidelines require FIIs or each of their sub-accounts to have no less than 20 investors, except for a few entities like pension funds.

The new norms also require that no single investor accounts for 49 percent of the fund raised for investment.

The new regulations came about after concerns were raised that a few high net worth individuals were using the FII route to play the stock market.

“Foreign Institutional Investors (FIIs) have to comply with October 1 deadline,” SEBI Chairman C.B. Bhave told reporters on the sidelines of a recent merchant banking industry function in Mumbai.

On the surge in stocks, driven by huge investment inflows from the FIIs, Bhave said, “As of now we are not concerned with the trail of money into the domestic market.”