BSE opens direct market access facility to FIIs

The BSE has extended the direct market access facility (DMA) to foreign portfolio investors.

This follows foreign investors being reclassified under three different categories following a change in SEBI regulations from the FII regime to the FPI regulations.

No manual intervention

DMA allows brokers to offer clients direct access to the exchange-trading system through the broker’s infrastructure without manual intervention by the broker.

With this, clients obtain direct control over orders, faster execution, reduced risk of errors associated with manual order entry, greater transparency, increased liquidity, lower impact costs for large orders, better audit trails and better use of hedging and arbitrage opportunities through the use of decision support tools/algorithms for trading.

Brokers have the right to call upon initial margins from their FPI clients as required by regulation for every segment of the exchange. They are also entitled to recover all expenses and losses incurred on the FPI’s behalf (arising out of the FPI’s default and imposed on the broker by the BSE) by adjusting margins and other deposits.

Brokers also have the right to fix exposure limits and the entitlement to withdraw the DMA facility if these limits are breached.

In addition, brokers are obliged to maintain client KYC records, keep client margins in a separate bank account, send settlement updates to the client including delivery/payment schedules, besides offering a technologically secure DMA system to their FPI clients.