Mumbai, July 06: Securities and Exchange Board of India is keeping a "close watch" on the pattern of investments by foreign funds including hedge funds in the Indian capital market and may seek help of its counterparts like Securities and Exchange Commission of USA to track them. Asked about the reports on large-scale investments of hedge funds, overseas funds that enter and exit markets for arbitrage opportunities, Sebi chairman G N Bajpai said today that "the regulator is keeping a tab on investments by foreign funds as part of monitoring work".
He, however, did not elaborate if regulator has initiated a probe on presence of hedge funds and its impact on markets.

Unlike foreign institutional investors, hedge funds are not directly registered with the regulator and may operate through sub-account route in the Indian markets, Sebi sources said adding these funds could also be operating through issuance of participatory notes.
On seeking help of Sebi's counterparts to keep trail on "hot money" brought by hedge funds, Bajpai said "if there is need, Sebi could approach capital market regulators in countries like USA and Mauritius for assistance".
Many foreign funds with an exposure to Indian markets are registered in Mauritius for tax benefits. Bureau Report