Securities and Exchange Board of India has accorded the status of foreign institutional investor to United Nations' Employees Pension Fund, the third large fund to come to India in recent weeks.

Speaking at a CNBC-TV18 Investor Camp in Kolkata on Sunday, Sebi chairman G N Bajpai said: "UNEPF's case reflected the larger interest that foreign investors had been showing in Indian securities markets."

UNEPF was one of the world's largest funds and its assets under management was worth nearly $26 billion.

Bajpai said, "CalPers, a US-based fund, had earmarked India as a favourable investment destination in preference to countries such as China. Foreign investors were convinced that the Indian stock markets would function well because volatility had largely been controlled and that Sebi has been fairly successful in minimising risks to a great extent. We have been able to reduce systemic risk, structural risk and operational risk to a great extent."

Investors currently had the option to hedge risks, which was why futures and options were gaining popularity.

"Introduction of shorter settlement cycle of T+2 was also minimising risks in trading in securities," he said.

Bajpai, on the overlap between the jurisdictions of the Sebi and the Department of Company Affairs, said there were some issues relating to listed companies, but the matter would be sorted out shortly.

Sebi has recently registered two large funds as FIIs -- Missouri Teachers' Fund and Missouri Non-teachers' Fund.

CalPers was clearly a watershed development for the Indian market since most other funds look at CalPers as a "benchmark" for investing in various countries.

On December 2003 the market value of UNEPF's assets had increased to $25.9 billion, as against $20.9 billion at the end of December 2002. This represented an increase of 24 per cent during the year. These assets are invested in 46 countries, including emerging markets and now India.