FIIs would now be allowed to tender their securities directly in response to an open offer for takeovers/acquisition of shares. As against the previous directive requiring FIIs to trade in the secondary market through registered stock brokers, they can now directly hand over shares to an acquirer, Sebi chairman D R Mehta said.

The Sebi board which met here to approve its annual report, also amended its regulations to permit FII trading in derivatives when introduced and allow FII investment in unlisted securities through the debt route, as announced by the finance minister in his budget speech.

In yetanother change to FII regulations, the process for approval of sub-accounts of registered FIIs has been simplified. FIIs would now only be required to submit an undertaking that sub-accounts for whom they are seeking registration meet with all criteria, Mehta said. These concessions came at a time when selling pressure by FIIs is continuing unabated. FIIs had taken out $ 215 million from the Indian markets for the month of June (till June 22). FIIs had already pulled out $ 218 million in the month of May. As a result, the cumulative net investment has fallen to $ 8,840.5 million in June as against $ 9,041.2 million over the preceding month. The total net outflow in the month of April was $ 24.8 million.

According to Mehta, the South-east Asian market crisis, expectation of depreciation in Chinese currency in addition to a falling rupee, sanctions, flat budget and the general economic conditions had affected the FII investment in the country. ``A total net outflow of nearly $ 450 million over the last threemonths will definitely reflect on the market,'' he added. Countering questions on the current volatility in the market, Mehta said, "Volatility in the market has stabilised over the last few days." Sebi has also called a meeting of the inter-exchange co-ordination committee to review the ban imposed on short sales.