Use of Participatory Notes in Indian Equity Markets and Recent Regulatory Changes

Author/Editor: Singh, Manmohan
Publication Date: December 01, 2007
Electronic Access: Free Full text (PDF file size is 227KB).
Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: 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.
Series: Working Paper No. 07/291
Subject(s): Hedge funds | India | Foreign investment

Author's Keyword(s): participatory notes | SEBI | Hedge Funds | India
Publication Date: December 01, 2007
Format: Paper
Stock No: WPIEA2007291 Pages: 13
US$18.00 (Academic Rate:
US$18.00 )
Please address any questions about this title to