What are participatory notes (ODIs) in India?

ODIs are instruments issued by foreign portfolio investors to overseas investors for trading Indian securities without direct registration with Sebi.

How will Sebi increase transparency for ODIs?

Sebi is implementing a new SOP requiring ODI subscribers to register with NSDL and provide their Legal Entity Identifier (LEI).

What are the new disclosure rules for ODI holders?

ODI subscribers with significant exposure to a single stock or group will face granular disclosure requirements, revealing information about the ultimate beneficial owners.

Home / Business and Economy / India Closes ODI Secrecy Loophole

India Closes ODI Secrecy Loophole

1 Dec, 2025

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Summary

ODIs will soon be regulated, ending secrecy for foreign investors.
Investors must register with NSDL and provide legal entity identifiers.
New rules extend granular disclosure obligations to ODI subscribers.

India is introducing stringent regulations to demystify offshore derivative instruments (ODIs), commonly known as participatory notes. This move aims to end the opacity surrounding these financial tools, which have allowed anonymous foreign investors to trade Indian securities without direct registration with the Securities & Exchange Board of India (Sebi).

The new Standard Operating Procedure (SOP) mandates that ODIs can only be issued to foreign subscribers registered on the NSDL portal. These subscribers will also be required to provide their Legal Entity Identifier (LEI), a unique code crucial for identifying parties in financial transactions, thereby promoting greater transparency.

Furthermore, the SOP extends granular disclosure rules, previously applicable to Foreign Portfolio Investors (FPIs), to ODI subscribers. This ensures that even if an FPI has not breached exposure thresholds, an ODI subscriber with significant concentration in a particular stock or group must reveal details down to the last natural person, preventing circumvention of disclosure norms.