Skip to content

Direct entry for hedge funds

The lure of the much-feared participatory notes, through which hedge funds now invest in the Indian stock markets, may soon wane.
The Securities and Exchange Board of India (Sebi), the capital markets regulator, has for the first time directly invited hedge funds to register with it and participate in the Indian stock markets without the cover of participatory notes.
Participatory notes are often seen as tools for money laundering and there have been numerous calls, including from the Reserve Bank of India, to curtail them.
It is widely estimated that 48 per cent of the $50 billion investment by foreign institutional investors in the Indian markets has come through offshore participatory notes.
Allowing hedge funds direct entry will help Sebi track the source of funds coming into the capital markets more efficiently. It is difficult to track the source of funds coming in through participatory notes.
Sebi’s thinking was articulated by its chairman, M Damodaran, at a meeting organised by ICICI-Securities in Singapore early this month, which foreign investors (including several hedge funds) attended.
Sources who attended the meeting said Damodaran invited hedge funds to register with Sebi and take part in the domestic markets directly.
Globally, hedge funds, which are estimated to manage close to $1.5 trillion of assets, are known for their quick entry and exit from various asset classes, creating sharp fluctuations in prices.
But a counter view is that hedge funds, by their nature of going against the trend, could bring in stability to the markets when other investors make panic exits.

Source : Business Standard

Posted in Main Page.

No Responses (yet)

Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.

Some HTML is OK

or, reply to this post via trackback.

Disclaimer: The website solely provides information about HEDGE FUNDS INDIA space. No data or statement herein is or should be construed to be a recommendation for the purchase, retention, or sale of the securities referred to herein and we accept no liability for the consequences of your reliance on this data and information. The value of investments and the income derived from them may fall as well as rise. The information in this website is based on data gathered from publicly available websites and other information mediums. We have not independently verified such information , do not represent it as accurate, true or complete, make no warranty, express or implied regarding it and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use. Investments in hedge funds, private equity, venture capital and other private investment funds are speculative and involve a high degree of risk. You could lose all or a substantial amount of your investment. This website does not list, and does not purport to list, the risk factors associated with an investment in any of the funds listed on this site. We do not represent any hedge funds, private equity or investment/financial advisors nor give any investment recommendations.