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FIIs have made a representation to SEBI on the five per cent liquidity condition that SEBI recently introduced for redeeming IDRs into equity shares.
The representation was made by FIIs just a couple of days ago after the SEBI announcement, said sources. SEBI is yet to reply to FIIs on the representation.
SEBI had said on June 3 that allowing redemption freely could result in reduction of number of IDRs listed, thereby impacting its liquidity in the domestic market as two way fungibility was not allowed.
Hence in consultation with RBI, SEBI decided that after the completion of one year from the date of issuance of IDRs, redemption of the IDRs shall be permitted only if the IDRs are infrequently traded on the stock exchange(s) in India. The condition is that liquidity should be five per cent or less for redemption.
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