Get Use Of Participatory Notes In Indian

Participatory Notes are financial instruments that are issued by a registered institutional investor to an overseas investor who intends to invest in the Indian stock market without having to register himself with the financial regulator in India, i.e., the Security and Exchange Board of India (SEBI).

Introduction. Participatory notes, also referred to as P-Notes, are Overseas Derivative Instruments that have Indian stocks as their underlying assets. They allow foreign investors to buy stocks listed on Indian exchanges without being registered with the Securities and Exchange Board of India (SEBI).

For example, Indian-based brokerages buy India-based securities and then issue participatory notes to foreign investors. Any dividends or capital gains collected from the underlying securities go back to the investors.

The SEBI and other market regulatory bodies in India are in favour of participatory notes as they are worried about hedge funds functioning via these instruments leading to volatility in the Indian exchanges.

Participatory notes are easily traded overseas through endorsement and delivery. They are popular because investors anonymously take positions in Indian markets, and hedge funds may anonymously carry out their operations.

Participatory notes are also called as P-Notes. They are financial instruments that are issued by registered foreign portfolio investors to Overseas investors. They are Overseas derivative instruments with their underlying set being the Indian stocks.

These notes are a unique Indian invention started in 2000 by SEBI to enable foreign corporates and high networth investors enter the Indian market without having to go through the process of registering as Foreign Institutional Investor (FII).

Any capital gains and dividends accumulated through these PNs will go into the hands of investors. The SEBI and other market regulatory bodies in India are in favour of participatory notes as they are worried about hedge funds functioning via these instruments leading to volatility in the Indian exchanges.