SEBI Lifts Ban On Barclays For Issuing ODI s (31-Aug-2010)
Since the deficiencies in the system and processes of Barclays have been remedied, market regulator Securities and Exchange Board of India (SEBI) has lifted ban that it had imposed on British bank --Barclays-- for issuing offshore derivative instruments (ODI), an instrument that allows the lender to facilitate investment by unregistered entities into Indian stock markets.
SEBI had in December last year, imposed ban on Barclays Bank Plc from issuing overseas derivative instruments following its failure to provide correct disclosure details of the derivatives that were used by foreign investors to buy Indian equities. But now from submissions made by Barclays and the review reports of KPMG (auditor of international standing), Barclays is believed to have undertaken steps to validate its systems and processes to ensure that true and correct reports of its ODI activity are furnished to SEBI.
The case pertains to reporting of four ODIs issued by Barclays back in December 2006 with Reliance Communications as underlying assets. Initially, Barclays in its report to SEBI had said that ODIs were issued to the UBS AG. Later, the bank told the regulator that they were issued to Hythe Securities and not UBS. Hence, the market regulator in December 2009 asked the bank to furnish a certificate from an auditor of international standing about its ability to correctly report transactions. With reference to this, the reviewer (KPMG) furnished an assurance report on June 3, 2010.
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