Murky rules mire ODIs

Foreign institutional investors have clashed with the Securities and Exchange Board of India in recent years over the issuance of offshore derivatives instruments. Barclays Capital and Société Générale are the latest institutions to run foul of the opaque rules governing this area of finance. By Cindy Leiw

Offshore derivatives instruments (ODIs), or participatory notes (PNs), are issued through pre-approved foreign institutional investor (FII) accounts to foreign entities that may not have qualified for direct investment, but are seeking direct exposure to the Indian market. However, certain investors prefer this means of access as it often has lower transaction costs and recordkeeping overheads and