*Reason for fall in Stock Market*

The Asset Manager's Roundtable of India, a forum for foreign portfolio investors, today warned of outflows of $75 bln from Indian capital markets if the market regulator fails to rollback its latest circular on beneficial ownership of FPI funds.
    The Securities and Exchange board of India, in April, asked all non-resident Indians and persons of Indian origin to disclose the beneficial owner of funds invested by foreign investors in Indian capital markets by Sep 30. The regulator extended this deadline to Dec 31 earlier this month.
    The forum believes that the nomenclature of the circular effectively bans non-resident Indians to operate as foreign portfolio investors.
    The forum met SEBI Chairman Ajay Tyagi to express their concern regarding the restrictive definition of beneficial owner of FPI funds.
    "Investment managed by non-resident Indian will be disqualified from investing into India and will have to be withdrawn and liquidated within a short timeframe," the forum said in a letter to SEBI Chairman.
    The letter signed by global foreign portfolio investors such as Morgan Stanley, Helios Capital, Kotak AMC, AMANSA Capital and seven others said that it's critical that appropriate consultation took place between asset managers and SEBI prior to any clarification on the circular.
    The forum has sought representation on the working group headed by former Reserve Bank of India deputy governor H.R. Khan to address the issues raised by FPIs.
    In the meantime, it has requested SEBI to scrap the circular with immediate effect.
    The forum's legal representative Nishith Desai Associates said that it has no issues regarding disclosure sought by the regulator, but the definition of beneficial owner as described in the circular.
    "Beneficial ownership has to be defined as true owner not as the controlling entity," Nishith Desai said.
    The forum said it's consultation with the ministry of finance gave an indication that the government was against disrupting the asset management industry.
    SEBI's circular on beneficial owner disclosure was aimed at curbing round-tripping of Indian funds by foreign funds as a means for money laundering.  End