Participatory Notes Essay

Participatory Notes commonly know as P-Notes or PNs ar instruments issued by registered unlike institutional investors (FII) to overseas investors, who wish to invest in the Indian stock markets without 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 with P-Notes is very simple and hence very popular amongst foreign institutional investors.Contents1 operative2 Need3 Participatory Notes Crisis of 20074 Trends in PN5 ReferencesWorkingParticipatory nones argon instruments utilise for making investments in the stock markets. However, they are not accustomd within the unpolished. They are engrossd outside India for making investments in shares listed in that country. That is wherefore they are also c all(prenominal)ed offshore derivative instruments.In the Indian context, foreign institutional investors (FIIs) and their sub-accounts mostly use these instruments for facilitating the participation of their overseas clients, who are not concerned in participating directly in the Indian stock market.For example, Indian-based brokerages buy India-based securities and then issue participatory notes to foreign investors. Any dividends or capital gains peaceful from the underlying securities go back to the investors.Need namelessness Any entity investing in participatory notes is not required to register with SEBI (Securities and Exchange Board of India), whereas all FIIs have to compulsorily get registered. It enables large put over funds to carry out their operations without disclosing their identity. rest of Trading Trading through participatory notes is palmy because participatory notes are like contract notes mobile by endorsement and delivery. Tax Saving rough of the entities route their investment through participatory notes to dramatise advantage of the tax laws of certain preferr ed countries. specie Laundering PNs are becoming a preferred with a host of Indian money launderers who use them to first take funds out of country through hawala and then get it back use PNs.