Participatory Notes (PNs or P-Notes) are instruments issued by registered foreign institutional investors (FII) or overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator SEBI. These are considered as offshore derivative investments as Indian shares as underlying assets. These investments are of short-term in nature.
SEBI permitted foreign institutional investors to register and participate in the Indian stock market in 1992. Investing through P-Notes is very simple and hence very popular amongst foreign institutional investors
According to Securities and Exchange Board of India (SEBI) data, the value of P-note investments in Indian markets – equity, debt and hybrid securities – was at Rs 97,744 crore in August 2021. Some of FIIs working in this segment are Citigroup (C), Deutsche Bank, HSBC etc.
Foreign Institutional Investor (FII) is an investor or investment fund that is from or registered in a country outside of the one in which it is currently investing. Institutional investors include hedge funds, insurance companies, pension funds and mutual funds. Not only do FIIs trade for themselves, but they also trade for their clients, who are known as sub-accounts. These sub-accounts do not have to be regulated to be able to register with SEBI
FIIs have to report all such investments each quarter to SEBI; however they need not disclose the identity of the actual investors
Some of the prominent features of Participatory Notes are:
Download this article as PDF
Click to go to JAIIB Preparation Page
Punjab Civil Services 2022
ESIC Deputy Director 2022