An employee is reflected in a glass panel as he monitors securities on a computer at a brokerage firm in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

BSE Scraps Special Foreign Investment Window After Regulator Eases Framework

The BSE Ltd. will scrap a window that allowed overseas investors to trade among themselves in shares of companies that exhausted foreign holding cap.

The exchange will discontinue the 6 lakh series from July 1 in the equity segment, Asia’s oldest exchange said in a circular.

The window was used by foreign institutional investors to trade in stocks, largely banks, after nearing investment limits. Earlier, foreign holding in banks had to fall 2 percentage points below the 74 percent cap before fresh overseas investments would be allowed, according to the Reserve Bank of India’s rules. Such investors till then traded through the 6 lakh series.

That’s no longer necessary as the stock market regulator has asked exchanges and depositories to monitor foreign institutional holding in real time and flag it when it comes within 3 percent of the cap.

HDFC Bank Ltd. is expected to be among the lenders that could see buying once the exchanges switch to the new framework. Scrapping of the special window will increase the quantum of buying in shares of the private lender, according to a Macquarie note. The bank could see buying of more than $1 billion (Rs 6,500 crore), sending its stock higher, the brokerage said.

Also read: Why HDFC Bank Stands To Gain From Real-Time Reporting Of Foreign Holding