Reporting requirements for FPI Investment in Hybrid Securities

SEBI vide its circular dated November 15, 2017 has now introduced a new category of reporting for investments by foreign portfolio investors (“FPI”) in hybrid securities.

Earlier, FPI investments were classified as either ‘debt’ or ‘equity’ depending on the type of the security in which the FPIs transacted. Now, FPIs are permitted to invest in REITs and InvITs, which are classified as hybrid securities.

The aforesaid hybrid securities were not reflected in the daily FPI net investment data or the monthly/fortnightly FPI Assets Under Custody data. Therefore, a third category termed as “Hybrid Security” has now been created for the purpose of capturing and disseminating FPI investment data in hybrid securities.

SEBI has further required  the depositories (NSDL and CDSL) to put in place necessary systems for the daily reporting by the custodians of the FPIs and disseminate on their websites, the value of assets (in form of debt, equity and hybrid securities) under control by FPIs.