Mumbai : To keep a tab on possible speculation, Sebi has put in place a stronger monitoring mechanism to ensure that exposure of foreign institutional investors to Interest Rate Futures (IRF) do not cross a certain limit.
The Securities and Exchange Board of India (Sebi) asked market participants to keep information about aggregate gross long positions of FIIs in IRF on a daily basis. An IRF is a contract between a buyer and a seller agreeing to the future delivery of any interest-bearing asset such as government bonds.
The depositories are now required to aggregate the gross long position of FIIs in IRF in each stock exchange.
This exposure of overseas entities along with their investments in government securities should be taken into account for monitoring their adherence to prescribed regulatory limits.
FIIs are allowed to investment a maximum of USD 25 billion in government securities. In case the total of cash and IRF of all FIIs reaches 85% of the permissible limit, the depositories would have to inform Reserve Bank of India (RBI), Sebi and stock exchanges.
