Participatory Notes Essay

Participatory Notes commonly know as P-Notes or PNs are instruments issued by registered distant institutional raimentors (FII) to overseas investors, who wish to invest in the Indian stock marts with place registering themselves with the market regulator, the Securities and Exchange Board of India SEBI.SEBI permitted foreign institutional investors to register and participate in the Indian stock market in 1992.Investing through P-Notes is genuinely simple and hence very popular amongst foreign institutional investors.Contents1 workings2 Need3 Participatory Notes Crisis of 20074 Trends in PN5 ReferencesWorkingParticipatory notes are instruments used for make investments in the stock markets. However, they are not used within the coarse. They are used outside India for making investments in shares listed in that country. That is why they are also called offshore differential coefficient instruments.In the Indian context, foreign institutional investors (FIIs) and their sub-ac counts mostly use these instruments for facilitating the community of their overseas clients, who are not interested in participating directly in the Indian stock market.For example, Indian-based brokerages buy India-based securities and then issue democratic notes to foreign investors. Any dividends or capital gains collected from the underlying securities go back to the investors.NeedAnonymity Any entity investing in participatory notes is not required to register with SEBI (Securities and Exchange Board of India), whereas all FIIs require to compulsorily get registered. It enables large hedge funds to carry out their operations without disclosing their identity. Ease of Trading Trading through participatory notes is blue-blooded because participatory notes are like contract notes transferable by imprimatur and delivery. Tax Saving Some of the entities route their investment through participatory notes to take advantage of the tax laws of certain preferred countries. Money wa sh PNs are becoming a favourite with a host of Indian money launderers who use them to first take funds out of country through hawala and then get it back using PNs.