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Opening of demat accounts by Clearing Corporations and Clearing Members

Reserve Bank of India has permitted in July 2006 Foreign Institutional Investors (FIIs) to offer foreign sovereign securities with AAA rating as collaterals to recognized Stock Exchanges in India for their transactions in the derivatives segment.

2. With a view to further liberalise the procedure, RBI has decided on 19th July 2007, in consultation with the Government of India and SEBI to permit SEBI approved clearing corporations of stock exchanges and their clearing members to undertake the following transactions subject to the guidelines issued from time to time by SEBI in this regard :

i) to open and maintain demat accounts with foreign depositories and to acquire, hold, pledge and transfer the foreign sovereign securities, offered as collateral by FIIs;

ii) to remit the proceeds arising from corporate action, if any, on such foreign sovereign securities; and

iii) to liquidate such foreign sovereign securities if the need arises.

3. Clearing Corporations shall report, on a monthly basis, the balances of foreign sovereign securities, held by them as non-cash collaterals of their clearing members to Reserve Bank of India.

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