Use of participatory notes in Indian equity markets and recent regulatory changes, Issues 2007-2291
International Monetary Fund, Monetary and Capital Markets Dept., 2007 - Investments, Foreign - 13 pages
This paper focuses on the use of participatory notes (PNs) by foreign investors, as a conduit for portfolio flows into Indian equity markets for more than a decade. The broadening of India's foreign investor base, in recent years, has a bias towards hedge funds/unregistered foreign investors who invest primarily via PNs. While tax arbitrage via capital gains tax has almost disappeared since July 2004, it is intriguing to note that since then the demand for PNs has actually increased. The paper suggests some reasons for the continuation of a buoyant market in PNs, and explains the possible impact from the recent regulatory changes.
What people are saying - Write a review
We haven't found any reviews in the usual places.
Other editions - View all
$30 billion 40 percent ban on PN Bank bilateral tax treaty blue chip Business Standard capital flows capital gains tax cash PNs conduit credit risk debt market Demand for Rupee-Linked EBRD emerging markets February FII Flows FII or sub FIIs hold FIIs were allowed foreign investors gains tax arbitrage go long cash Government of India Hong Kong impact Indian corporate Indian equity markets Indian regulators Indian rupee inflows invest in India investor base jurisdiction liquidity market for PNs Market sources indicate Market sources suggest Markets Monitor feature NDF market offshore demand Offshore Derivative offshore rupee bond onshore participatory notes PNs PN derivative positions PN holders PN issue PN users PNs on derivatives Portfolio primarily real money accounts registered regulated entities rupee risk Rupee-Linked Securities Rupees 1 billion SEBI SEBI's securities or futures Singapore sizable Stock Exchange sub account supranational swap tenor transaction U.S. dollar various issues