What is the purpose of this participatory notes?

Question

What is the purpose of this participatory notes?

Answer 1

P Notes are investments made by FIIs and Hedge Funds in the Indian Markets. Some of these foreign investors  are not officially registered with SEBI, and therefore pump in their money not directly but through surrogate investors and large brokerages.

Needless to say these investors are cash rich and can control the market to their whims, where the small investors get crushed. Therefore any prudent finance minister will be careful about P Notes controlling the markets. The recent rally suggested loss of control due to which the FM suggested a cap on P notes. Hope this clarifies.

PEACE!

Answer 2

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.

In many ways, this is similar to an informal ADR process, where brokerages hold on to stocks for foreign investors. However, Indian regulators are not very happy about participatory notes because they have no way to know who owns the underlying securities. Regulators fear that hedge funds acting through participatory notes will cause economic volatility in India's exchanges.

Check source as well.

Answer 3

Wooof!

The problem is not with P-notes ; but with the guidelines as issued by Finance Minister .

Govt . wants the registration of unregistered FIIS (in a sense) so as to keep a tab on money inflows into the market ;by the way preventing any other scam to surface .

Answer 4

To invest indirectly in share market.

Answer 5

Financial instruments used by investors or hedge funds that are not registered with the Securities and Exchange Board of India to invest in Indian securities. 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.