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New Sebi rules to hit Mauritius and Cayman Islands hard, says report

New Sebi rules to hit Mauritius and Cayman Islands hard, says report

New Sebi rules to hit Mauritius and Cayman Islands hard, says report
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By CNBC-TV18 Oct 8, 2019 12:04:47 PM IST (Published)

As per the notification, only FPIs located in FATF countries or managed by an entity based in a FATF jurisdiction will be allowed to deal in participatory notes (PNs), i.e. offshore derivative instruments with Indian stocks, futures and options as underliers.

Mauritius and Cayman Islands, serving as key offshore bases for foreign investors trading on Indian exchanges, are yet again under the watch of market regulator Sebi, reported The Economic Times.

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A new rule announced by the market regulator two weeks ago is likely to severely impact foreign funds from the jurisdictions which do not belong to the 39-member club of Financial Action Task Force, the report said.
Financial centres like Mauritius, Cayman Islands and Cyprus are not FATF members. FATF is an inter-governmental policymaking body which was set up at the 1989 Paris summit of G7 due to increasing concerns over money laundering.
As per the notification, only FPIs located in FATF countries or managed by an entity based in a FATF jurisdiction will be allowed to deal in participatory notes (PNs), i.e. offshore derivative instruments with Indian stocks, futures and options as underliers.
"Sebi’s decision will not go down well with Mauritius, which may see a flight of funds and businesses to Singapore — a FATF member country which, like Mauritius, has a tax treaty with India," said the report.
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