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P-Note investments decline to Rs. 1.9 trillion in April

The value of P-Notes issued with derivatives as underlying stood at Rs 1.27 trillion at the end of April 30

May 15, 2014 3:49 IST | India Infoline News Service
P-Note investments drop to Rs 1.9 trillion in April. Investments into Indian shares through participatory notes (P-Notes) declined to Rs 1.87 trillion in April from Rs 2.07 trillion in the preceding month.
The value of P-Notes issued with derivatives as underlying stood at Rs 1.27 trillion at the end of April 30.
Participatory notes also called P-Notes are offshore derivative instruments with Indian shares as underlying assets. These instruments are used for making investments in the stock markets. However, they are not used within the country. They are used outside India for making investments in shares listed in the Indian stock market. That is why they are also called offshore derivative instruments.
Participatory notes are issued by brokers and FIIs registered with SEBI. The investment is made on behalf of these foreign investors by the already registered brokers in India. 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 brokers that issue these notes or trades in Indian securities have to mandatorily report their PN issuance status to SEBI for each quarter. These notes allow foreign high networth individuals, hedge funds and other investors to put money in Indian markets without being registered with SEBI, thus making their participation easy and smooth. P-Notes also aid in saving time and costs associated with direct registrations.

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