February, 2017 India: Industry Trends & Opportunities March 2017 CUSTODIAL SOLUTIONS Stock Holding Corporation of India Ltd - India’s Premier Custodian 1 Largest Custodian by AUC & Volumes Sardar Vallabhbhai Patel : Statue Of Unity
February, 2017
India: Industry Trends & Opportunities
March 2017
CUSTODIAL SOLUTIONS
Stock Holding Corporation of India Ltd - India’s Premier Custodian
1Largest Custodian by AUC & Volumes
Sardar Vallabhbhai Patel : Statue Of Unity
Index
2
Foreign Investment flows into India
Investment Routes to India
Direct Access Route - Portfolio Investments
Fund Structures - Key Benefits
Investment journey with StockHolding as your partner
StockHolding – your Custodian in India
Global Custodian Recognitions
Largest Custodian by AUC & Volumes
9374422
4.50%
Total No Of Registered FPIs
in India
Percentage to Total
No of FPIs from Japan Total No Of Registered FPIs in India
Advantage India :
GDP growing at more than 7% since 2014
The 3rd largest economy (as per PPP) -World Bank
IMF has kept projections for India’s growth at 2018-19 at 7.6%
Robust Demand - India to be become the 5th largest consumer economy by 2025
Supportive Guidelines - Increasing impetus to Infrastructure Development
Comprehensive Economic Partnerships in place – to share fruits of free trade, transfer of capital , labor & technology
Largest Custodian by AUC & Volumes
Foreign Investment flows into India
3
28159.95
0
5000
10000
15000
20000
25000
30000
Japan
FDI Inflows into India (In USD million) - FY 2000-18
FDI Inflows into India (In USD million) - FY 2000-18
Depository Receipts
Foreign Investments
Foreign Direct Investments (FDI)
Automatic routeApproval route
Foreign Venture Capital Investor
(FVCI)Venture Capital Fund and
Undertaking
Investment Routes and Instruments
Investments by Non Resident Indians
and Person of Indian origin (PIOs)
Foreign Portfolio Investors (FPI)
Market Entry through Custodian
• Securities in primary & secondary markets including shares & warrants of listed & unlisted companies
• Stock lending & borrowing - on exchange• Offer for sale & institutional placement programme
Equity
• Government Debt
• Corporate Debt Debt
• Index futures and options
• Individual stock futures and options
• Volatility futuresEquity Derivatives
• Gross open position across all contracts in IRF
• Hedging opportunity for underlying exposure to protect from interest rate fluctuations• Gross open position across all contracts in CD for FPI in category I & II
Interest Rate Futures & Currency Derivatives
• Mutual Fund Units and Exchange Traded Funds• Conversion of DR and Foreign Currency Convertible Bonds (FCCB) issued by Indian Companies
• Indian Depository Receipt (IDR)
• Commodity Markets ( Commodity Derivative Segment )
Other Products
4Largest Custodian by AUC & Volumes
Direct India Access – Portfolio Investments
Foreign Investor
Onshore –Domestic Market Offshore – IFSC *
* International Finance Service Centre
Foreign Portfolio Investor (FPI) Direct Registration Fund Route
• Eligible Foreign Investor (EFI)• Foreign Portfolio Investor
(FPI)
Market Structure Segregated Market All key intermediaries Invest all securities
Market Structure Omnibus - available Key intermediaries All Derivatives & Debt
Largest Custodian by AUC & Volumes 5
Fund Structure – Key Benefits
• Offers ease of investments for large number of investors
• reduced on-boarding (time, documentation)
• ease of entry and exit
• compliance adherence at fund level a relief for the investor
• Fund Managers expertise and knowledge on the markets
• Local presence of the investment/ fund manager aids regular interaction
• Cost competitiveness at all levels , hence higher returns for the investors
• Investment across a basket helps mitigate sectoral risk for investor
• Objective based – multiple funds possible to meet investors risk and return appetite or preference for specific asset classes/ securities
Investors
• Multiple client engagement opportunities with new markets , asset classes, securities
• Help diversification of portfolio and mitigate concentration risk, country risk etc
• Opportunities to facilitate higher returns for clients
• Retain clients and helps maintain client confidentiality
• Focussed offerings to match investors expectations
• Opportunities to gain further expertise and earn higher investment fees
Fund Managers/ Securities
Firms
Largest Custodian by AUC & Volumes 6
Start Investing in India • Remitting Funds from Overseas Bank Account to the Bank Account opened in India
• Place Orders with Broker
Step 4: StockHolding opens Custody & Depository Accounts; Obtains UCC & CP Code from Exchanges
Step 5: Open Trading Account with your Broker• Appoint your Broker • Submit requisite forms and supporting documents for Registration
Step 2: Register as Foreign Portfolio Investor (FPI)• Appoint your DDP/ Custodian• Submit Form “A” and KYC Form along with supporting documents to StockHolding
Your
Step 1: Obtain Tax Registrations• Appoint your Tax Consultant ( CPA ) • Submit requisite forms and supporting documents
FPI Registration Process with StockHolding …
Step 3: Open Bank Accounts in India – StockHolding’s unique proposition • A banker of your choice- Choose a banker from our multiple banking partners• Submit requisite forms and supporting documents
8Largest Custodian by AUC & Volumes
A Simplified KYC…. For Ease of Access for FPIs
Sr Particulars Category I Category II Category III Custodian will....
TimeFrame
1 Ascertain Eligibility Criteria
• Govt. & Govt.
related foreign investors
• Intl./ Multi Lateral Org./ Agencies
• Appropriately regulated Institutions/ Persons / Broad based funds :
• Non Appropriately Regulated Broad based funds whose investment manager is appropriately regulated;
• University funds and pension funds;
• University related endowments already registered with the SEBI as FII / sub- accounts
All other FPIs not eligible to be included in Category I &II such as Trusts, Family Offices, Individuals, Corporate Bodies
Assist in identifyingthe segment
0-2 days
2 Registrations Provide documentation for Tax Registration
Simultaneously provide documentation for SEBI Registration
Assist with a CPA for your PAN registration
We will assist you
4 -10 Days
3 - 5 Days
3 SEBI Fees
( For Block of 3 years )
NIL US $ 3,000 US $ 300 Facilitate submission of requisite fees to SBI & Provide FPI registration
4 Registration done, what next?
• Open Cash / Foreign Currency Accounts with a Bank • Open a Brokerage Account with a Broker
• Open a Custody Account with the Custodian
Custodian acts as a one point contact
2 - 4 Days
2 Days
5 Equities , Debt and Derivatives
Yes We will provide updates
Same Day
9Largest Custodian by AUC & Volumes
StockHolding’s Single Kit for FPI Registration
Stage Activity Undertaken by
CPA Bank Broker Client Kit – Documents
I i. Knowing the Client and Ascertaining the Client Eligibility
√Investor Information Document
ii. Engagement Letter √ √ √ Engagement Letter
II i. Tax Registrations -application & KYC for PAN
√ PAN Application FormSupporting Documents (PAN application)
ii. FPI Registration – INDIA license
√ FORM A ( SEBI stipulated form ) KYC Form Supporting documents
iii. Custodian Documentation including KYC
√ Custodian Agreement POA for Custody account POA for Bank Account
iv. Demat Account Opening √Demat Account Opening Form
IIIBank Account -(KYC & Account Opening)
√ Account Opening Form including KYC
IVDemat Account Opened √
UCC/ CP Code obtained √
VBroking Account Set up including KYC
√ Account Opening Form
VI Ready to Trade Yes Yes Yes Yes Investor can start giving instructions for trade
10Largest Custodian by AUC & Volumes
* India’s Pioneer Custodian since last 3 decades
* Strong Pedigree & fundamentals
* US SEC 17f compliant (Authorized to service US based funds)
* Client centric, Innovative solutions, multiple products
Leadership
Market Share-over 22% (AUC of total asset in India)
AUC US $ 535 billion (Institutional AUC $235 bn)
Over a Million Clients
Technology driven – from On- boarding to client reporting
* Deep Local Expertise – over 750 man years of custody experience
Widest local reach through 200 offices across India
Only Custodian to be Rated Market Outperformer by GCS in last 3 yrs
years
Long Standing, Diverse Client Relationships
Insurance Companies
BanksFPI-FDI-FVCI
PE, AIFBroker Dealer
Mutual Funds
Pension Funds
CustodiansCorporates
& Retail
12
StockHolding Securities ServicesReputed Custodian - Focused Solutions - Industry Expertise
Largest Custodian by AUC & Volumes
Custodial Service Offerings across all Asset classes with Investor
support in their time zone
Custodian with highest local market expertise and tested high
volume capability
High interactions with Regulators, Exchanges and
market intermediaries(Promoters of National Stock Exchange -NSE)
Unique and fastest onboarding and seamless
migration solutions
13
StockHolding: Your Expert Full Service Provider
Enabling one stop solutions
Largest Custodian by AUC & Volumes
Fully STP enabled, SWIFT integrated and multi-
locational service teams
Open architecture facilitates clients to choose from
multiple service providers
Strong financials with no debt along with high credit
rating from ICRA (MOODY’s Indian affiliate)
Adequate Insurance cover with Internal controls for risk
mitigation/management
Custodian with strong financials with no debt and profit making
since inception
Trade Servicing
Asset Servicing
Value Added Services
Client Servicing
- Trade Processing
- Trade Clearing & Settlement
- Securities Safekeeping
- Holding Reconciliation- Corporate Actions- Market Claims-- Income Reconciliation
-- Proxy Voting
-- Securities Lending-- Valuation & Fund Accounting-- Clearing Member for Derivative trades
-- Customized Reporting-- One-point Client Contact-- Dedicated Client Account Managers
A comprehensive suite of Service Offerings
- Account Set up
- Transition Management
Client On Boarding
14Largest Custodian by AUC & Volumes
Our Presence at IFSC – GIFT City (INDIA)
15
Easy Entry Process – Simpler & Shorter On-Boarding Process
Segregated Nominee Account Structure(SNA) structure permitted in the IFSC
All trades & settlements in USD – hence no foreign exchange risk
Trading opportunity for 22 hours a day
Eligible foreign securities as margins
Index Derivatives
Equity Derivatives
– Indian Single Stock Derivatives
– Global Single Stock Futures
Currency Derivatives - Global Currency Derivatives
Fixed Income Derivatives
Commodity Derivatives - Base Metals, Precious Metals, Energy
Primary market issuances
Equity
Eligible Investment Avenues
The IFSC advantage
Largest Custodian by AUC & Volumes
Our Securities Services – Capabilities
Technology
Disaster Recovery
Business Continuity Plan
Insurance Coverage
Human Resources
Over 750 man years of deep local expertise
Highly trained staff with in-depth knowledge of the Indian Capital market
A high level of competency with skill sets for FPI registration processing, Trade servicing , Corporate Action
& other asset servicing functions
End to End in- House IT Support Tier III – DataCentre : ISO/IEC 27001:2013 & TUV- NORD, Germany Capability to handle voluminous time critical transactions Highly Secure Systems with distinct servers
Tested Document Disaster Recovery (DR) plan
Monthly Testing of DR back up facility & bi- annual DR drills
Emergency response teams in place
Data replicated in synchronous mode
BCP set up at multiple locations ( Near Site & Far Site ) Different seismic zones Periodic BCP drills performed
Financial Institution Bond
Electronic and Computer Crimes
Financial Institutions Professional Indemnity
16Largest Custodian by AUC & Volumes
Thought Leadership and Market Advocacy of Stock Holding
Member of SEBI committees on FPIs
Submitted Thought leadership paper to RBI on, “ Custodian Bank”
Rated high by Clients in Client Surveys
Highest Industry Reputation & Thought Leadership
17Largest Custodian by AUC & Volumes
Sr. No. Memberships
1 Registered with SEBI as a Custodian & Designated Depository Participant
2 Depository Participant with both Depositories ( NSDL & CDSL )
3 Only Non-Bank Custodian having RBI approval to provide custody for Govt Securities
4 Clearing member with both clearing houses of NSE & BSE ( NSCCL & ICCL )
5 Professional Clearing Member with NSE & MCX -SX
Global Custodian Recognitions
Clients repose their trust in
Stock Holding’s local market
expertise, high quality Client
servicing, Technology driven
solutions and a proven ability
in handling diversity and
complexity of client
requirements which form the
core of our competency.
Extracts as quoted by the Global Custodian Magazine…
Recognized & Accredited by UK based ‘Global Custodian’ as the Category Outperformer &
Market Outperformer in 2016, 2017 & 2018
Largest Custodian by AUC & Volumes 18
Registered Office Stock Holding Corporation of India Limited301, Centre Point, Dr. Babasaheb Ambedkar RoadParel, Mumbai – 400012, INDIA
Website https://custody.stockholding.com
Contact Persons
Name Mr. R. AnandHead – Custody
Mr. Vineet PotnisHead – Custody Products & Marketing
Telephone No. +91 22 61779073 + 91 22 6177 9071
Cell No. +91 9987776171 + 91 90046 91682
Email id [email protected] [email protected]
For FPI related queries you may also email on :
Contact Us Thank You
Largest Custodian by AUC & Volumes 19
Migration Process: From Existing Custodian to StockHolding
Client commences its transaction with StockHolding as a Custodian
Intimation sent to SEBI upon transition of assets being carried out
StockHolding Confirms Holdings to Client
StockHolding/ Outgoing Custodian determines timelines for transition of Assets
Client opens Account with StockHolding and gets a NOC from the out-going Custodian
Client appoints StockHolding as a Custodian in India
Largest Custodian by AUC & Volumes 21
FPI Category III Requirements -- Standard Documentation & KYC
Individuals Non-Individuals
Proof of Identity (Passport Mandatory) Constitutive Documents
(Memorandum and Articles of Association, Certificate of
Incorporation , Trust Deed, Partnership Deed)
Proof of Address (Driving License, Bank Statement/Utility
Bill not more than 3 months old)
Copy of the Balance Sheets for the last 2 years *
PAN card with Photograph (Mandatory) Bank Letter stating satisfactory relationship for more than one
year *
Bankers Certificate for one year *
(Bank stating that the applicant has a satisfactory banking
relationship for more than a year)
Board Resolution stating that entity is allowed to invest in
securities market
Employment Identity Card (if available) Shareholding details and Ultimate Beneficiaries Details( list of
UBO & their proofs of identity)
Tax Filings for 2 years* Senior Management Credentials , Photo , Proofs of identity of
all directors along with their date of Birth and nationality
required on the company letter head.
Tax Residency Certificate* Authorized Signatories List with specimen signatures and
identity proofs of all authorised signatories along with their
photographs signed across.
Copies of all documents submitted by the applicant should
be self attested .
Attested / Notarized by notary public, Manager of a
Multinational Foreign Banks
(Name, Designation, contacts & Seal should be affixed)
* Alternatives available
This is an indicative list. Exact KYC details to be consulted with Custodian at the time of account opening
Largest Custodian by AUC & Volumes 22
FPI Category II – Standard Documentation & KYC
Documents to be submitted by the applicant entity as supporting
Legal Documents to be submitted to the DDP & Custodian
Constitutional Documents – Memorandum & Articles of
Association , Certificate of Incorporation
Standard Declarations cum undertakings
Proof of Address – POA mentioning the address / Utility Bills /
Bank Account Statements
SEBI Application
PAN card with Photograph (Mandatory)
Registration Certificate from local regulator
Board Resolution for investment in securities Custodial Agreement
Bank Letter stating satisfactory relationship for more than
one year *
Power Of Attorney
( executed by authorised officials & to be notary certified)
Tax Filings for 2 years / Copy of the Balance Sheets for the
last 2 years *
Authorized Signatories List with specimen signatures and
identity proofs of all authorised signatories along with their
photographs signed across.
23Largest Custodian by AUC & Volumes
* Alternatives available
This is an indicative list. Exact KYC details to be consulted with Custodian at the time of account opening