Participatory Notes (P- notes)

About Participatory Notes:

• These are often referred to as PNs or P-Notes. These are financial instruments used by investors and hedge funds to invest in the Indian securities, and no registration is required with the Security Exchange Board of India (SEBI).
• Investments flowing in through PNs are considered as offshore derivative investments.
• These are issued by registered foreign Portfolio Investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly.
• While the FIIs have to report all such investments each quarter to SEBI, they need not disclose the identity of the actual investors.

What is Foreign Portfolio Investment?

• It refers to the purchase and holding of a wide array of foreign financial assets by investors seeking to invest in a country outside their own.
• Foreign portfolio investors have access to a range of investment instruments such as stocks, bonds, mutual funds, derivatives, fixed deposits, etc.
• FPI generally intends to invest money into the foreign country’s stock market to generate a quick return.
• In India, foreign portfolio investment is regulated by the Securities and Exchange Board of India (SEBI).