Commencement of Foreign Portfolio Investor regime delayed; SEBI allows continued acceptance of FII registration and fee applications until commencement.
The Foreign Portfolio Investor (FPI) regime will commence and SEBI will continue to accept complete applications for FII and sub-account registration, fee acknowledgments, and miscellaneous requests until the transition to Designated Depository Participants (DDPs), after which DDPs will accept all such applications; Qualified Depository Participants deemed as DDPs may continue opening QFI accounts during the transition.

Auditors' Certificate requirement: standardised certification of accounting treatment compliance mandated for scheme filings under the listing agreement.
A mandatory standard format is prescribed for the Auditors' Certificate under Clause 24(i) of the Equity Listing Agreement to confirm that the accounting treatment in draft schemes of amalgamation, merger or reconstruction complies with applicable Accounting Standards and other generally accepted accounting principles, with any departures or regulator-prescribed treatments identified; the certificate must be furnished with draft/final schemes filed with stock exchanges from the circular date and auditors' examination is to follow professional guidance.

Mutual funds must publish detailed monthly AUM breakdowns, strengthen voting disclosures, and boost regional investor education.
The circular requires Mutual Funds to disclose detailed monthly AUM metrics (scheme-category, T-15/B-15 contributions, sponsor/other contributions, investor-type, distributor-source and state/UT-wise) in prescribed spreadsheet formats to AMFI for consolidated publication; mandates AMCs to record and publish specific rationale for each voting decision, provide quarterly and annual voting disclosures with auditor certification and trustee/board review confirmations; requires regional-language investor education and expanded distribution via PSU banks and online channels; and excludes specified high-quality instruments and short-term bank deposits from debt scheme sector exposure calculations.

OTC trades in corporate bonds must be reported on stock-exchange trade platforms within 15 minutes, effective April 1, 2014.
All OTC secondary market trades in corporate bonds must be reported on a trade reporting platform of any one stock exchange debt segment (NSE, BSE or MCX-SX) within 15 minutes of the trade; stock exchanges must implement systems, amend bye-laws, notify member brokers, and permit clearing and settlement through designated clearing corporations, effective April 1, 2014.

Anti-money laundering obligations: intermediaries must bolster risk assessment, CDD reliance rules, record retention and designate a compliance director.
Registered intermediaries must conduct documented risk assessments considering client profiles, geographies, transaction types and applicable sanctions lists; may rely on regulated third parties for client due diligence subject to PML Rules and SEBI guidance while retaining ultimate responsibility; maintain and preserve transaction, identity, account and FIU IND reporting records for the prescribed post business relationship period; designate and notify a Designated Director in addition to a Principal Officer; and ensure updated AML/CFT policies, internal audits and reporting to regulators.

Shifting from Trade-for-Trade to Rolling Settlement requires dematerialisation threshold, certification, and exchange reporting obligations to regulator
Companies with connectivity to both depositories may be shifted from Trade-for-Trade Settlement to Normal Rolling Settlement only if at least 50% of other-than-promoter holdings are in dematerialised form, evidenced by a certificate from the Registrar and Transfer Agent or, if no RTA exists, from a practicing Company Secretary or Chartered Accountant, and provided no other grounds for continuation of TFTS exist; stock exchanges must report actions taken in their Monthly/Quarterly Development Report.

FII/QFI commercial paper investment cap reduced; new sub limit within unchanged corporate debt ceiling applies immediately.
The circular reduces the FII/QFI sub limit for investment in Commercial Papers, restricting eligible foreign investors to the newly prescribed cap while maintaining the overall Corporate Debt ceiling and separately preserving an allocation for credit enhanced bonds; the amendment is effective immediately and requires custodians to inform their clients.

Dematerialisation requirement for settlement: exchanges may shift securities to normal rolling settlement upon certified dematerialisation and no continuing TFTS grounds.
Companies that have established connectivity with both depositories may be shifted from Trade for Trade Settlement to normal Rolling Settlement provided a required proportion of non promoter holdings are in dematerialised form certified by the Registrar and Transfer Agent or, if no separate RTA exists, by a practicing Company Secretary or Chartered Accountant, and provided there are no other grounds for continuation of TFTS; stock exchanges must report the action to the regulator in their development reports.

Software escrow safeguards urged to ensure seamless broker transition and contractual protections against vendor service failures.
Stock brokers should adopt safeguards against software vendor failure by exploring a software escrow arrangement, reducing reliance on a single vendor, and including contract terms that grant access to design and development specifications if the vendor fails to provide services, require broker training and expertise development, impose penalty clauses for trading disruptions or software glitches, and obligate vendor cooperation in audits including forensic audits. Stock exchanges must implement systems to effect these measures, amend bye laws and notify and disseminate the requirements to brokers.

Software testing requirements: expedited approval for limited changes while preserving risk-management integrity and preventing unauthorized modifications.
Stock exchanges may permit expedited approval for bug fixes, exchange-driven broker software changes, and vendor software already tested in mock environments; schedule mock testing, system-auditor certification and approval to facilitate transitions; waive mock testing and audits for changes limited to look-and-feel that do not affect risk-management or connectivity; require brokers to restore systems to production state after testing and implement controls to prevent unauthorized changes; and amend rules and notify members to implement these measures.

Risk based inspection framework for depository participants mandates adaptive sampling and combined qualitative quantitative scoring to prioritize inspections.
Depositories must adopt a risk based inspection framework covering specified operational and compliance areas, use an Adaptive Sample Size methodology with base samples and risk based multipliers, and compute a Total DP Risk Score by summing normalized quantitative and qualitative area scores. DPs are categorized by percentile into risk bands that determine inspection frequency and sample sizes; joint inspections and off site inspection tools are required, and depositories must amend rules, communicate requirements, and share risk ratings for common DPs.

Individual scrip-wise price bands imposed on non-derivative index constituents; exchanges must update systems and notify members.
Individual scrip-wise price bands of up to 20% are mandated for securities that are part of index derivatives but not eligible for F&O, to curb excessive price movements. Stock exchanges must implement the bands effective February 17, 2014, put in place systems, amend byelaws/rules, notify trading/clearing members and publish the measure on their websites, under the authority of Section 11(1) of the SEBI Act to protect investor interests.

Government debt investment limits expanded for specified foreign investors, increasing reserved sub limit within the overall cap.
The reserved sub limit for specified foreign institutional investors (Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks) has been increased from USD 5 billion to USD 10 billion within the overall Government debt limit of USD 30 billion. The overall envelope is allocated as USD 20 billion for FIIs and QFIs and USD 10 billion for the specified categories, with a Treasury Bills investment cap of USD 5.5 billion within the USD 20 billion limit.

Information technology governance requires depositories to adopt board-level IT oversight, appoint a CISO and strengthen BCP.
SEBI requires depositories to establish a Board-level IT Strategy Committee and an executive IT Steering Committee to align IT with business objectives and implement IT strategy. Depositories must adopt an IT strategy document and an Information Security policy approved by the Board and reviewed annually, create an Office of Information Security, appoint a Chief Information Security Officer to manage IT risk and incidents, and designate a senior official to head the Business Continuity Plan; necessary systems must be implemented and bye-laws amended where applicable.

FII Position Limits in interest rate futures: monitoring with government debt aggregation and halt on further long increases at threshold.
The circular sets FII position limits for IRF-capping gross open positions and restricting gross short positions relative to long holdings-and mandates that aggregate FII long exposure in cash and IRF not exceed the permissible government securities investment limit. It requires exchanges to report aggregate gross long IRF positions to depositories; depositories must aggregate these with FII government debt investments, publish the totals, and notify regulators when utilization crosses specified thresholds, after which FIIs must not increase long IRF positions until exposure falls below the lower threshold.

Designated Depository Participant obligations: DDPs must register and monitor foreign portfolio investors and enforce eligibility and group investment limits.
The circular mandates that each FPI engage a Designated Depository Participant (DDP) and that the DDP and the FPI's Custodian be the same entity; DDPs must scrutinise Form A applications against a checklist of eligibility and fit and proper criteria, may grant conditional Category II registrations subject to broad based undertakings and 180 day confirmation, and must manage surrender, name changes, DDP transfers and material changes. DDPs must obtain investor group declarations and report to depositories to ensure clubbing of investment limits so aggregate group holdings remain below the prescribed limit, and must implement tax deduction/payment mechanisms and procedures for post expiry disinvestment permissions.

Standardized Delivery Instruction Slips strengthen transfer controls through serial numbering, electronic validation and mandatory scanning to protect investors.
Delivery Instruction Slip issuance and processing are standardized to strengthen transfer controls by mandating pre-printed serial numbers, DP ID and BO ID, unique serial numbering within each DP, prohibiting mixed-use slips and multiple execution-date use, requiring immediate electronic reporting of DIS issuance, validation of serial numbers at execution to prevent used or unissued DIS from being processed, and mandatory next-working-day scanning with retained archived images and audit trails.

Securitised debt reporting: mandatory single platform trade reporting and designated clearing settlement to improve market transparency.
All trades in securitised debt instruments by specified institutional investors must be reported on a single recognized trade reporting platform by both buyer and seller within a short timeframe; reporting platforms must publish continuous market data and relevant disclosures. Trades between those investors and entities regulated by the central banking authority must be cleared and settled through designated clearing corporations and will be subject to norms prescribed by those clearing corporations.

Know Your Client requirements: Section C moved from Part I to Part II; intermediaries must update forms within transition period.
Certain client information formerly in Section C of Part I of the standard Account Opening Form is moved to Part II for individuals and non-individuals. Revised Part I data are to be captured by KRAs from the date of the circular, and intermediaries have six months to modify pre-printed KYC forms. The shift retains basic, stable KYC in Part I for central capture while placing changeable, intermediary-specific details in Part II to reduce repeated KRA updates and harmonise KYC across the financial sector.

Deposit requirements for debt-segment members require specified deposits for clearing members and limited exemptions for existing or gross-only clearers.
Deposit obligations for the dedicated debt segment require Stock Broker/Proprietary Trading Members to comply with the Base Minimum Capital requirement; Clearing Members and Self Clearing Members must deposit ` 10 lacs with no exposure to be granted against that deposit. Exemptions apply where the entity is already a CM/SCM or stock broker in another segment, or where a CM/SCM clears and settles only on a gross basis with no settlement guarantee. Stock Exchanges and Clearing Corporations must amend rules and implement systems within one month and report implementation to SEBI.