Policy options permitting foreign Hedge Funds to access

Indian securities market

Internationally, hedge funds are a growing segment of asset management community and increasingly becoming popular with institutional investors, including pension funds, university funds, insurance and endowments. Some jurisdictions have allowed marketing of hedge funds products to investors, while several emerging markets have allowed access of their markets to offshore hedge funds as foreign investors. Of late, hedge funds have shown interest in the Indian market. The FII Division of SEBI has reviewed the developments and studied the option of permitting hedge funds to operate within the regulatory framework of the SEBI (FII) Regulations, 1995., subject to additional safeguards, if warranted.

The report has been put up on the SEBI web-site under the title "Reports for public comments” at www.sebi.gov.in which seeks to open a limited FII-window to allow the well-managed alternative investment vehicles of the above genre to operate as direct investors in the Indian securities markets in a transparent and orderly manner.

Comments/ suggestions/ views of the public and others concerned in this regard are invited on the proposed policy option. Comments on the same may be sent to the FII Division, SEBI, A-Wing, Mittal Court, Nariman Point, Mumbai-400021, or  by e-mail to Ms. Sharlene Miranda at sharlenem@sebi.gov.in or faxed to 91-22-22829520, on or before June 8, 2004.

Mumbai

May 24, 2004