Sebi allows partial IDR fungibility

The Securities and Exchange Board of India has decided to allow partial fungibility of Indian Depository Receipts (IDRs) — redemption and conversion of IDRs into underlying equity shares

Written by ENS Economic Bureau | Mumbai | Published: August 29, 2012 1:16:38 am

The Securities and Exchange Board of India has decided to allow partial fungibility of Indian Depository Receipts (IDRs) — redemption and conversion of IDRs into underlying equity shares — in a financial year to the extent of 25 per cent of the IDRs originally issued.

Sebi’s move is expected to help in attracting foreign companies to list their IDRs on domestic bourses,analysts said. In the 2012-13 Budget,the government had proposed to allow two-way fungibility of IDRs to encourage greater foreign participation in the Indian capital market. The two-way fungibility would enable Indian shareholders to convert their depository receipts into equity shares of the issuer company and vice versa.

The fungibility issue is seen as one of the major factors restraining foreign entities from listing their IDRs. Only UK banking major Standard Chartered in 2010 has come out with an IDR issue and listed its shares on the Indian stock exchanges.

“Suitable instructions for modifying the existing legal framework governing IDRs,in order to implement the decision to allow redemption of IDRs into underlying equity shares and re-conversion of equity shares of a foreign issuer (which has already listed their IDRs) into IDRs,will be issued separately,” the circular said.

Meanwhile,Sebi Chairman UK Sinha on Tuesday said he is hopeful of the government permitting the market regulator to access “call data records” of people being probed in alleged market irregularities. “Request for call data record is being considered by the government. It requires a lot of consultations with other ministries… it will happen but will take some time before it is approved,” Sinha told reporters here.

Sinha said that Sebi has sought the government permission to access call data records of people under scanner for their role in alleged manipulative activities to put across a strong case against such entities.

— With PTI

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