The saga of Indian securities laws regulating offshore derivative instruments (popularly called "participatory notes" or "P-Notes") has just had a new chapter. The Securities Appellate Tribunal ("SAT") has ruled that the Securities and Exchange Board of India ("Sebi") was wrong in insisting that foreign institutional investors ("FIIs") should furnish an undertaking that they have not issued P-Notes to certain select types of persons. While issuance of P-Notes against underlying holding in exchange-traded options and futures was banned by Sebi last year, there can obviously be no legitimate ban on a foreign person issuing P-Notes against holdings in Nifty futures ((Nifty is the National Stock Exchange's flagship index) that are traded on the Singapore Exchange. It would be foolhardy to believe that movements in the Nifty futures in Singapore would be insulated from impacting price movements in Indian securities. Therefore, the ban on derivatives-based P-Notes can become quite meaningless. It is time to take an intense and hard look at the regulatory framework for P-Notes and ask some existential questions.   more »

A Bear Stearns managing director is readying an India-focused multi-strategy fund of hedge funds for launch in July with between $10 million and $20 million in initial assets. Ridaa Murad, who has built India-focused synthetic swaps, corporate finance and equities products for Bear Stearns since 2003, has set up New York-based Veda Asset Management with Bradford Matthews, who owns a broker/dealer in India. The Veda Multi-Strategy India Fund will initially include seven managers, eventually increasing its stable to about a dozen. Most of the managers are based in India, Singapore or Hong Kong, with a few based in the U.S. “Our strategy is to try and be as cycle- and asset class-agnostic as possible, so we’re not just equities and not just single directional,” said Murad. “We have direct lending, debt lending, convertible arbitrage and distressed-debt managers. We also have managers in the futures and options arbitrage space, private equity and real estate, as well as long/short and long-biased managers. Given the market in India, we think the opportunities are not just in one part of the market cycle and the trick to investing in India is buying the sell-off.”   more »

The Blackstone Group announced that Aaron Nieman will be launching Blackstone Altius Advisors, a new event-driven strategy focusing on opportunities in the Asia Pacific region. A global, highly experienced investment team will be headquartered in Hong Kong, with additional professionals based in Tokyo, Mumbai, and New York. Nieman joined Blackstone from S.A.C. Capital Management, where he was a Managing Director in the Canvas Capital Management division. "As Blackstone continues to aggressively seek opportunities within Asia, Aaron and his team will provide additional investment capability that will bolster our presence in the region." said Antony Leung, Chairman of Blackstone Greater China.   more »