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Below The Comment On SEBI circular on FPI By Nikunj Saraf, Vice President, Choice Wealth

The Securities and Exchange Board of India (SEBI) has issued a bold circular to reshape Offshore Derivative Instruments (ODIs). The move aims to boost transparency, reduce systemic risks, and align foreign investments with India’s market conditions while tackling regulatory loopholes.

Foreign Portfolio Investors (FPIs) must now navigate stricter rules, including separate ODI registrations and detailed disclosures. These steps enhance market integrity but limit flexibility and add compliance costs, potentially deterring short-term players.

While restrictions on derivatives might tighten liquidity, they’re expected to attract long-term institutional investors who value transparency and market stability. By reducing speculative positions, SEBI’s reforms could lead to a more resilient equity market.

SEBI’s measures are a double-edged sword, presenting challenges for operational ease but promising a stronger, more accountable market. These reforms signal India’s commitment to sustainable growth, positioning the country as a reliable hub for global investments.

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