India: Industry Trends & Opportunities Stock Holding ......Interest Rate Futures & Currency Derivatives •Mutual Fund Units and Exchange Traded Funds •Conversion of DR and Foreign

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


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


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


Your Investment Journey with StockHolding as your Partner


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


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


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


Stock Holding - Your Custodian in India


* 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


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


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


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


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


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


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


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 :

[email protected]

Contact Us Thank You


Annexure


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


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


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.


* Alternatives available

This is an indicative list. Exact KYC details to be consulted with Custodian at the time of account opening