Sebi planning unique identity code for FPIs

The Securities and Exchange Board of India (Sebi) wants to make it mandatory for foreign portfolio investors (FPIs) to provide their legal entity identifier (LEI) code, further boosting the KYC framework for overseas investors buying into Indian financial assets.

“With respect to LEI, it is proposed that the requirement of obtaining the same may be made mandatory for all non-individual FPIs,” Sebi said in a note.

“All existing FPIs that have not already provided their LEIs to the DDPs (designated depository participant) shall be provided a time period of 6 months from the date of issuance of mandate by Sebi for providing their LEI to the DDPs, failing which their account shall be blocked for further purchases until LEI is provided to the DDPs,” Sebi said in the board note.

The LEI is a 20-character unique identity code that is assigned to entities who are parties to a financial transaction.

Globally, LEI is widely used in areas relating to banking, securities market, credit rating and market supervision.

“LEI has become a common standard for identification of an entity globally and a standard requirement in most markets as part of entity KYC (know your customer). While in practice most DDPs were anyway asking for the LEI number as part of their FPI KYC, this was not a mandatory requirement,” said Siddharth Shah, partner – funds & corporate, Khaitan & Co.

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