"At present, there is no evidence," Sebi Chairman M Damodaram told reporters when asked whether any terror money was finding its way to the stock exchanges.
Damodaran was briefing reporters after the crucial board meeting which approved restrictions on participatory notes.
These curbs are aimed at curbing investment by anonymous foreign entities.
To a query on a mechanism to check terror funding in stock markets coming in the shape of corporate entities, he said, "Anyway, securities market
regulation is not an answer for everything. There are other regulators and enforcement agencies to look into this."
Damodaran's statement gains significance in the wake of apprehensions expressed by National Security Adviser M K Narayanan earlier this year that terrorist outfits could be investing in the Indian stock markets to raise funds.
Damodaran also said Sebi has maintained that money comes through the banking channels, which are expected to have 'Know Your Customer' norms. "There are other channels like brokers and depositories which also follow KYC norms," he said.
Finance Minister P Chidambaram had told investors in New York last week that KYC norms in India were not able to find out the ultimate beneficiaries of derivative-based P-notes because of their multi-layer structure.