SEBI may allow unregulated funds - paper
MUMBAI (Reuters) - India's stock market regulator may allow investors not regulated in their home countries to register as foreign institutional investors (FIIs) if they disclose the nature of their funds and investments, the Business Standard reported on Wednesday.
The move would help entities like pension funds register as FIIs, Securities and Exchange Board of India (SEBI) Chairman M. Damodaran told the paper in an interview.
SEBI has proposed curbs on investment instruments known as participatory notes, which it says allow foreigners to make a backdoor-entry into the market without registering with Indian authorities and lessens transparency of flows.
"There is no bar on any type of foreign investors, but a regulator has to look at the quality of funds and nature of deals," Damodaran said.
The SEBI board plans to finalise the measures on Oct. 25.
SEBI may also allow foreign individuals with investment funds of more than $50 million to operate as sub-accounts to invest in the country's equity markets, Damodaran said in the interview.
Among other things under review, he said, was the one-year track record of the foreign entity for getting registered.
Indian shares surged 5 percent on Tuesday after SEBI said FIIs could apply to register their proprietary sub-accounts and, if they did so within a week, they could continue issuing participatory notes while the application was pending.
That rise, the biggest gain in 16 months, unwound most of the market's 7.5 percent fall since the proposals were released last week on fears they would lead to a large withdrawal of foreign funds.