Dear All,
Every one aware of that the SEBI has announced permission for short selling of securities by the Financial Institutions including SEBI Registered FIIs.
In terms of A.P.(DIR Series) Circular No.53 dated December 17, 2003 wherein SEBI registered FIIs/sub-accounts of FIIs were permitted to buy/sell equity shares/debentures of Indian companies. In terms of para 5 of the Annex to abovesaid, FIIs are not allowed to engage in short selling and are required to take delivery of securities purchased and give delivery of securities sold.
Vide AP DIR Circular No.23 dated 1st Janaury 2008 ( Today), It has now been decided in consultation with Government of India and SEBI, to permit Foreign Institutional Investors (FIIs) registered with SEBI and sub-accounts of FIIs to short sell, lend and borrow equity shares of Indian companies. Short selling, lending and borrowing of equity shares of Indian companies shall be subject to such conditions as may be prescribed in that behalf by the Reserve Bank and the SEBI / other regulatory agencies from time to time.
The above permission is subject to the following conditions:
(i) The FII participation in short selling as well as borrowing /lending of equity shares will be subject to the current FDI policy and short selling of equity shares by FIIs shall not be permitted for equity shares which are in the ban list and /or caution list of Reserve Bank.
(ii) Borrowing of equity shares by FIIs shall only be for the purpose of delivery into short sale.
(iii) The margin/collateral shall be maintained by FIIs only in the form of cash. No interest shall be paid to the FII on such margin/collateral.
The designated custodian banks shall separately report all transactions pertaining to short selling of equity shares and lending and borrowing of equity shares by FIIs in their daily reporting with a suitable remark (short sold/lent/borrowed equity shares) for the purpose of monitoring by the Reserve Bank.
Thanks & RegardsAlagar
09884731993
Karvy Investment Banking
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