Participatory Notes Essay Example for Free

participatory Notes EssayParticipatory Notes commonly know as P-Notes or PNs are instruments issued by designateed foreign institutional investors (FII) to overseas investors, who adjure 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 through P-Notes is very aboveboard and hence very popular amongst foreign institutional investors.Contents1 Working2 consume3 Participatory Notes Crisis of 20074 Trends in PN5 ReferencesWorkingParticipatory notes are instruments used for do investments in the stock markets. However, they are not used within the country. They are used outside India for reservation investments in shares listed in that country. That is why they are also called offshore derivative instruments.In the Indian context, foreign institutional investors (F IIs) and their sub-accounts mostly use these instruments for facilitating the participation of their overseas clients, who are not interested in active directly in the Indian stock market.For example, Indian-based brokerages buy India-based securities and consequently issue participatory notes to foreign investors. all dividends or capital gains collected from the underlying securities go back to the investors.NeedAnonymity Any entity place 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 hedge funds to carry out their operations without disclosing their identity. Ease of work Trading through participatory notes is easy because participatory notes are like contract notes transferable by authority and delivery. Tax Saving Some of the entities route their investment through participatory notes to take advantage of the appraise laws of certain preferred c ountries. Money Laundering PNs are becoming a favourite with a emcee of Indian money launderers who use them to first take funds out of country through hawala and then get it back using PNs.