Reasons for Indian Stock Market's Biggest Crash(2)

So, what are these p-notes?

Why such a havoc about them?

What makes them so special?

P-Notes are 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.

Participatory notes are like contract notes.

These are issued by FIIs to entities that want to invest in the Indian stock market but do not want to register themselves with the SEBI.


SEBI was not very happy about participatory notes because they have no way to know who owns the underlying securities,

it feared that hedge funds acting through participatory notes will cause economic volatility in India's exchanges.


By Saurabh Patil