Consolidated FDI Policy Circular of 2020

Paragraph 5.2.21 Infrastructure Company in the Securities Market

Chapter: 5 · Sector Specific Conditions on FDI
Text as on: As issued 15 October 2020; Press Notes since are not applied

5.2.21 INFRASTRUCTURE COMPANY IN THE SECURITIES MARKET

Sector/Activity % of Equity Entry Route FDI Cap

5.2.21.1 Infrastructure companies in Securities 49% Automatic

Markets, namely, stock exchanges, commodity

exchanges, depositories and clearing corporations,

in compliance with SEBI Regulations

5.2.21.2 OTHER CONDITIONS

(i) Foreign investment, including investment by FPIs, will be subject to the Securities Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations 2012, and Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 as amended from time to time, and other Guidelines/Regulations issued by the Central Government, SEBI and the Reserve Bank of India from time to time.

(ii) Words and expressions used herein and not defined in these regulations but defined in the Companies Act, 2013 (18 of 2013) or the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) or in the concerned Regulations issued by SEBI shall have the same meanings respectively assigned to them in those Acts/ Regulations.

DEFINITIONS:

(1) Futures trading in commodities are regulated under the Forward Contracts (Regulation) Act, 1952. Commodity Exchanges, like Stock Exchanges, are infrastructure companies in the commodity futures market. With a view to infuse globally acceptable best practices, modern management skills and latest technology, it was decided to allow foreign investment in Commodity Exchanges.

(2) For the purposes of this chapter,

(i)“Commodity Exchange” is a recognized association under the provisions of the Forward Contracts (Regulation) Act, 1952, as amended from time to time, to provide exchange platform for trading in forward contracts in commodities.

(ii) “recognized association” means an association to which recognition for the time being has been granted by the Central Government under Section 6 of the Forward Contracts (Regulation) Act, 1952

(iii)“Association” means any-body of individuals, whether incorporated or not, constituted for the purposes of regulating and controlling the business of the sale or purchase of any goods and commodity derivative.

(iv)“Forward contract” means a contract for the delivery of goods and which is not a ready delivery contract.

(v) “Commodity derivative” means- a contract for delivery of goods, which is not a ready delivery contract; or

 a contract for differences which derives its value from prices or indices of prices of such underlying goods or activities, services, rights, interests and events, as may be notified in consultation with SEBI by the Central Government, but does not include securities.

5.2.21 INFRASTRUCTURE COMPANY IN THE SECURITIES MARKET

Sector/Activity                                     % of Equity   Entry Route
                                                      FDI Cap

5.2.21.1 Infrastructure companies in Securities     49%           Automatic

Markets, namely, stock exchanges, commodity

exchanges, depositories and clearing corporations,

in compliance with SEBI Regulations

5.2.21.2 OTHER CONDITIONS

(i) Foreign investment, including investment by FPIs, will be subject to the Securities
Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations 2012, and
Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 as
amended from time to time, and other Guidelines/Regulations issued by the Central
Government, SEBI and the Reserve Bank of India from time to time.

(ii) Words and expressions used herein and not defined in these regulations but defined in
the Companies Act, 2013 (18 of 2013) or the Securities Contracts (Regulation) Act, 1956 (42 of
1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories
Act, 1996 (22 of 1996) or in the concerned Regulations issued by SEBI shall have the same
meanings respectively assigned to them in those Acts/ Regulations.

DEFINITIONS:

(1) Futures trading in commodities are regulated under the Forward Contracts (Regulation)
Act, 1952. Commodity Exchanges, like Stock Exchanges, are infrastructure companies in the
commodity futures market. With a view to infuse globally acceptable best practices, modern
management skills and latest technology, it was decided to allow foreign investment in
Commodity Exchanges.

(2) For the purposes of this chapter,

(i)“Commodity Exchange” is a recognized association under the provisions of the
        Forward Contracts (Regulation) Act, 1952, as amended from time to time, to provide
        exchange platform for trading in forward contracts in commodities.

(ii) “recognized association” means an association to which recognition for the time being
          has been granted by the Central Government under Section 6 of the Forward
          Contracts (Regulation) Act, 1952

(iii)“Association” means any-body of individuals, whether incorporated or not,
          constituted for the purposes of regulating and controlling the business of the sale or
          purchase of any goods and commodity derivative.

(iv)“Forward contract” means a contract for the delivery of goods and which is not a
          ready delivery contract.

(v) “Commodity derivative” means-
           a contract for delivery of goods, which is not a ready delivery contract; or

 a contract for differences which derives its value from prices or indices of prices of
            such underlying goods or activities, services, rights, interests and events, as may be
            notified in consultation with SEBI by the Central Government, but does not include
            securities.