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Securities and Exchange Board of India

Circular No. FITTC/CUST/14/2001

October 31, 2001


All Foreign Institutional Investors and Custodians of Securities

Dear Sir / Madam,

Sub: Issuance of Derivative Instruments by Registered Foreign Institutional Investors (FII).

It has came to the notice of SEBI that some FIIs are issuing derivative/financial instruments against underlying Indian securities. These instruments are known by various names such as Participatory Notes, Equity-Linked Notes, Capped Return Notes, Participating Return Notes etc. With a view to monitoring the investment by FIIs through these derivative / financial instruments, it has been decided that FIIs may report issuance / renewal / cancellation / redemption of the aforesaid instruments to SEBI with immediate effect as per the format enclosed as Annexure.

It is further advised that this report shall be submitted by only those FIIs which issue such instruments. Further, these reports are to be submitted only on issuance / renewal / cancellation / redemption of the aforesaid instruments and only for the month during which the FII has issued / renewed / cancelled / redeemed the aforesaid instruments. It is clarified that FIIs that have not issued such instruments or have no transactions during the month in respect of such derivative instruments are not required to submit a report to SEBI.

The FIIs, are requested to submit these reports on a monthly basis within a week of the end of the month, duly signed / approved by the compliance officer. The reports may be submitted by email (email id : ) or by fax (91-22- 284 5776).

These instructions are issued under regulation 20 of SEBI (Foreign Institutional Investors) Regulations, 1995 and shall come in force with effect from the month of October 2001.

A copy of the circular is available at the web page “Foreign Institutional Investors” on our website . The custodians are requested to bring the contents of this circular to the notice of their FII clients.

Yours faithfully,
General Manager
FAX NO: 91 22 2845776

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