Call for a FII law
View(s):The resurgence of the Colombo Stock Exchange (CSE) has triggered calls by the industry to establish a Foreign Institutional Investor (FII) law for investors or investment funds registered abroad to park their cash in Sri Lanka.
“They should be ‘recognised’ and they need to have and be under a proper law,” an industry source told the Business Times. He added that FII in emerging markets bring valuable capital and foreign currency, cut cost of capital through base-broadening and risk pooling, and indirectly steps up corporate governance, market efficiency and innovation. “In India FII-flow is believed to play quite an important role in deciding the direction of the market,” he said. FII investors mostly involve hedge funds, mutual funds, pension funds, insurance bonds, high-value debentures, investment banks etc while if such entities were to invest in the CSE, having a dedicated law will make life easier for them.
The source added that in November 1995, SEBI (the Indian stockmarket regulator) created the Foreign Institutional Investors Regulations which call for FIIs to register with the SEBI and to obtain approval from the Reserve Bank of India under the Foreign Exchange Regulation Act, 1973 to allow them to buy and sell securities, open foreign currency and rupee bank accounts and remit and repatriate funds.
(DEC)