FPI investment limits in government securities revised, raising sector and long-term category caps for the quarter.
Revision of FPI investment limits for the October-December 2017 quarter increases the upper caps for central Government securities and creates a higher separate cap for Long Term FPIs; SDL-General and SDL-Long Term caps are also enhanced. All existing allocation and monitoring conditions continue to apply. The circular takes effect immediately under Section 11(1) of the Act and requires custodians and depositories to inform FPI clients and implement the revised caps.

Corporate Debt Investment Limits redefined to exclude overseas rupee bonds and to create an infrastructure sub limit for long term FPIs.
Foreign investments in overseas rupee denominated bonds are excluded from the Combined Corporate Debt Limit, which is renamed Corporate Debt Investment Limits and restated in Rupee terms; amounts previously counted against the old limit are carved out and reallocated. A sub limit within the CDIL is established exclusively for Long Term FPIs to invest in infrastructure sector corporate debt (listed and unlisted), available on tap, while investments in unlisted corporate debt and securitised instruments remain subject to an existing aggregate cap and other extant FPI conditions continue to apply.

Reporting requirements for Category III AIFs updated to capture commodity derivatives exposure and impose single-commodity investment limit.
Category III Alternative Investment Funds must comply with a single-commodity investment limit and enhanced reporting obligations for commodity derivatives. Revised formats require non-leveraged AIFs to report scheme-wise cumulative net investments including a commodity derivatives line and maximum investment in any single commodity; leveraged AIFs must submit monthly scheme-wise exposure breakdowns across long/short futures and options, cash equivalents and gross totals, plus a table on maximum single-commodity investment. Reports in the revised formats are required for periods ending on or after September 30, 2017, and prior reporting requirements are modified accordingly.

Interest rate hedging for mutual funds allows imperfect futures hedges subject to high correlation, limits, and disclosure.
Permits mutual funds to hedge debt portfolio interest rate risk using Interest Rate Futures on a weighted average modified duration basis with a formulaic limit on short positions; allows imperfect hedging exempt from gross exposure up to 20% of scheme net assets provided correlation with the IRF is at least 0.9 (measured over prior 90 days), rebalancing occurs within five working days upon deviation, and net modified duration of the hedged portion remains non negative; excess hedging must be included in gross exposure and scheme characteristics must not be altered.

Foreign Portfolio Investor participation in commodity derivatives in IFSC permitted subject to non agricultural, cash settled, foreign currency conditions.
Foreign Portfolio Investors are permitted to participate in commodity derivatives on IFSC stock exchanges only for non agricultural commodity contracts, which must be cash settled on settlement prices determined on overseas exchanges and denominated exclusively in foreign currency; exchanges must amend bye laws, notify members and publish the provisions, with the instruction issued under the regulator's investor protection and market development mandate and effective from the date of issuance.

Recordkeeping requirement: brokers must retain verifiable client order evidence and record telephone instructions to prevent unauthorised trades.
Brokers must execute client trades only after retaining legally verifiable evidence of the client's instruction - such as a signed physical record, telephone recording, authorised email, internet transaction log, SMS record or other verifiable record - and bear the burden of producing such evidence in disputes; telephone instructions must be recorded and maintained, exchanges must disseminate and amend bye laws for uniform implementation and report on compliance.

Enhanced supervision data submission clarified with revised timelines and client exemptions; internal auditor compliance monitoring required.
Clarifies enhanced supervision data submission by stock brokers: submit client data as of the last trading day within prescribed periodic timelines with an initial monthly submission window transitioning to weekly submissions; exclude custodian settled clients and clients with zero balances who have not traded in the last twelve months; specified sub clause submissions to be made within seven calendar days. Stock Exchanges must ensure Internal Auditors monitor brokers' corrective actions on inspection deficiencies and include compliance status in internal audit reports, notify brokers and amend rules for uniform implementation.

Liquidity Enhancement Scheme exemption applies to all IFSC products, clarifying prior guidance and enabling uniform implementation.
The circular confirms that the exemption previously granted to stock exchanges in the IFSC to introduce the Liquidity Enhancement Scheme without complying with certain earlier circular requirements applies to all products traded in the IFSC, permitting uniform application of LES across product lines and was issued under SEBI's powers to protect investors and regulate the securities market.

Integration of broking activities allows single entity trading across equity and commodity derivatives subject to registration and due diligence.
Amendments permit a stock broker to operate in equity and commodity derivatives under a single entity. SEBI will grant a one time registration certificate; exchanges/clearing corporations grant subsequent permissions after due diligence. SEBI approval is required only when integration changes control. Client accounts may be transferred between brokers with express client consent and existing documentation preserved. Certain FMC restrictions are repealed or relaxed for activity within the same broking entity, and exchanges and depositories must amend bylaws, implement systems and carry out cross exchange due diligence.

Public shareholding thresholds for transferee entities under schemes of arrangement adjusted, with conditional relaxation and a one year compliance timeline.
The transferee must have at least twenty five percent of post scheme paid up share capital held by public shareholders of the transferor; if not, relaxation is permitted only where specified cumulative conditions are met: a valuation test, a minimum value of post scheme public shareholding, at least ten percent post scheme public shareholding from transferor shareholders, and a scheme undertaking to raise public shareholding to twenty five percent within one year of listing.

Proprietary position limits for FCY INR positions set; exchanges must compute, monitor and obtain approval before product launch.
SEBI modifies the March 2016 framework to require stock brokers to keep proprietary positions in USD INR, EUR INR, GBP INR and JPY INR within a consolidated single INR limit defined as the higher of a percentage of total open interest across all FCY INR pairs or a specified USD floor for bank and non bank brokers. Stock exchanges must implement a uniform methodology to compute and monitor these limits; proposals for launch of cross currency products must be submitted to SEBI with contract specifications, risk management and surveillance arrangements.

Outsourcing governance for exchanges and clearing corporations: board approved policy, retained legal accountability, and controls for core functions.
SEBI directs stock exchanges and clearing corporations to adopt a Board approved outsourcing policy defining material outsourcing, identifying non outsourcable core and critical activities, and permitting limited outsourcing to specialists or group entities only with clear demarcation and retained control. The policy must require documented due diligence, written contracts allocating responsibilities, monitoring of provider performance, business continuity and security measures, sub contracting safeguards, regulator access and audit rights, and periodic review of material outsourcing risks.

Cyber security framework for large registrars mandates board-approved policies, CISO, testing, monitoring, and incident reporting.
A mandatory cyber security and cyber resilience framework for Qualified RTAs requires board-approved policies, appointment of a CISO, a Technology Committee, and adoption of a risk lifecycle approach-identify, protect, detect, respond and recover-aligned with national critical infrastructure principles and standards such as ISO 27001/27002. Controls include strict access management, two-factor authentication, encryption of data in transit and at rest, network hardening, regular vulnerability assessment and penetration testing, monitoring and logging, incident response and recovery plans with drills, quarterly anonymised incident reporting to the regulator, staff training, and annual independent audits.

Credit rating requirement for IFSC listed debt securities expanded to include FATF jurisdiction agencies, with custodial and IFRS reporting obligations.
The amendments permit credit ratings for IFSC listed debt securities from agencies registered with the Board or in FATF member jurisdictions; require issuers to contract with a depository or custodian registered in a FATF jurisdiction and disclose that appointment in the information memorandum; and mandate financial statements prepared in IFRS/US GAAP (or local standards with a quantitative summary of material differences from IFRS) for entities issuing or listing debt securities in IFSC.

Issuance and listing of IFSC debt securities require exchange prescribed eligibility, FATF jurisdiction limits, and SEBI approved frameworks.
Stock exchanges in IFSC must prescribe issuer eligibility and issue requirements for debt securities issued in IFSC and submit these frameworks and any changes to SEBI for approval; exchanges must also prescribe initial and continuous listing requirements including corporate governance and submit them to SEBI. Debt securities issued outside IFSC may be listed only if issued in and by issuers resident in FATF member jurisdictions, with issuers entering listing agreements. Trading and OTC trades must be cleared and settled through IFSC clearing corporations, reported on one IFSC exchange reporting platform within fifteen minutes, and clearing frameworks submitted to SEBI. Persons resident in India are restricted from investing in specified IFSC debt securities except as permitted by the Reserve Bank of India.

Dynamic price bands for currency options must follow a uniform computation and guarded relaxation to prevent market manipulation.
Directs stock exchanges to implement a dynamic price band mechanism for EUR INR, GBP INR and JPY INR currency option contracts based on theoretical prices, with a uniform computation and relaxation process that considers underlying price movement, volatility, currency news, and cross market behaviour, and that prevents misuse for manipulation. Exchanges and clearing corporations must submit approval proposals including contract specifications, risk management and surveillance frameworks, implement systems and rule amendments, notify market participants, and report implementation status to the regulator.

Exemption from LES transparency requirements allows IFSC exchanges to create dedicated reserves for scheme incentives.
SEBI exempts IFSC stock exchanges from specified LES transparency and measurability requirements on condition that exchanges create a dedicated reserve for LES incentives/expenses based on a normative domestic study, exclude such reserves from net worth, and submit proposals for SEBI approval; other provisions of the earlier LES circular remain operative.

Online registration for Custodian of Securities now mandatory; applications and DDP approvals must be filed via the SEBI portal.
Applicants seeking registration as a Custodian of Securities and those seeking approval as Designated Depository Participant must submit their applications exclusively through the SEBI Intermediary Portal, which is operational with immediate effect; the circular provides the portal URL and contact channels for queries and frames the measure as issued under SEBI's statutory powers to protect investors and regulate the securities market.

Disclosure of default on loans and debt securities required, with prompt stock exchange reporting and quarterly updates.
Listed issuers must disclose within one working day at the first instance any Default-non payment of interest or principal on the due date-relating to listed debt instruments, commercial paper, MTNs, FCCBs, loans from banks and financial institutions, and ECBs. Disclosures must follow prescribed templates detailing issuer, date and nature of obligation, lender or instrument specifics, date and amount of default with instalment/interest breakup, gross principal affected, total issuance or borrowings and other particulars. Quarterly, outstanding defaults as of quarter end must be reported within seven days, and defaults must also be notified to credit rating agencies.

Restrictions on exclusively listed companies: freeze of promoters' transfers and market access barred until exit option provided to shareholders.
SEBI requires that promoters and directors of non-compliant Exclusively Listed Companies must have all equity share transfers and corporate benefits frozen and their identities disseminated; their bank accounts/assets may be attached to compensate investors. Such promoters, directors and promoted companies are barred from raising capital in the securities market and from serving as directors of listed companies until an exit option is provided to public shareholders and certified by the Designated Stock Exchanges, with Exchanges and Depositories instructed to coordinate enforcement.