"They should come here and invest directly. Let them come from the front door. Let them not hide," said Mr. Damodaran, chairman of the Securities and Exchange Board of India, according to the report.

Mr. Damodaran said about 30% of foreign institutional investments already come from hedge funds that invest through offshore participatory notes, derivatives issued by investment banks against underlying Indian securities, according to reports.

India's Business Standard newspaper reported today that that the Milan, Italy-based Aletti Gestielle Societa; Toronto-based DGAM Emerging Markets Equity Fund; Greenwich, Conn.-based Karma Capital Management LLC and New York-based BlackRock Inc. have been allowed to register as foreign institutional investors in recent weeks.

SEBI is considering circuit filters on the listing day of public issues, in an attempt to prevent price manipulation.

Mr. Damodaran said SEBI would soon issue guidelines for the measure.

Source : Investment News