Who are Foreign Portfolio Investors (FPI)?
In India, Foreign Portfolio Investment (FPI) refers to investment made by foreign investors in the financial assets of Indian companies. FPIs can invest in cash market, trade in derivatives (futures and options), currencies and commodities, listed on National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange (MCX) and National Commodity and Derivatives Exchange (NCDEX).
FPIs are regulated by the Securities and Exchange Board of India (SEBI). SEBI has set up a framework for FPIs to register with it and to comply with certain regulations. This framework is designed to protect the interests of investors and to ensure the orderly development of the Indian securities market.
How can FPIs access Indian Markets?
A DDP (Designated Depository Participant) is an entity that is authorized by SEBI to hold securities in electronic form on behalf of FPIs. There are 20+ DDPs registered as Custodians with SEBI, which overlook the trade activities and settlement procedure for FPIs. The DDP will provide the FPI with a demat account and act as an Custodian, which holds securities in electronic form. A broker is an entity that is authorized by SEBI to buy and sell securities. The registered broker execute the FPI's trades on the stock exchange.