{
  "title": "Use of Participatory Notes in Indian Equity Markets and Recent Regulatory Changes",
  "publication": "IMF Working Papers, December 1, 2007",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/use-of-participatory-notes-in-indian-equity-markets-and-recent-regulatory-changes-21508",
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  "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.",
  "sections": [
    {
      "heading": "Scope and primary focus",
      "content": "- Examines the use of participatory notes (PNs) by foreign investors as a conduit for portfolio flows into Indian equity markets for more than a decade.\n- Analyzes the broadening of India's foreign investor base, noting a bias towards hedge funds/unregistered foreign investors who invest primarily via PNs.\n- Investigates paradox: although tax arbitrage via capital gains tax has \"almost disappeared since July 2004\", demand for PNs has increased since that date.\n- Suggests reasons for the continued buoyancy of the PN market and explains the possible impact from recent regulatory changes."
    },
    {
      "heading": "Key findings and observations",
      "content": "- PNs have been a significant conduit for portfolio flows into Indian equities for over a decade.\n- The changing composition of foreign investors shows a bias toward hedge funds and unregistered foreign investors who rely on PNs.\n- Despite the near elimination of capital gains tax arbitrage since July 2004, PN demand rose rather than fell.\n- The paper articulates multiple reasons for persistent PN market activity and analyzes how recent regulatory changes could affect that market."
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subjects: Capital gains tax, Currencies, Hedge funds, Securities, Stock markets\n- Keywords: derivative instrument, hedge fund, investor, PN derivative leg, regulator, WP\n\n---\n\n Content in this bundle\n\n- wp07291\n  - wp07291 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp07291 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/use-of-participatory-notes-in-indian-equity-markets-and-recent-regulatory-changes-21508"
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    "[Markdown version](/en/publications/wp/issues/2016/12/31/use-of-participatory-notes-in-indian-equity-markets-and-recent-regulatory-changes-21508/index.md)",
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    "Authors: Manmohan Singh",
    "Published: December 1, 2007",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451868548.001",
    "Examines the use of participatory notes (PNs) by foreign investors as a conduit for portfolio flows into Indian equity markets for more than a decade.",
    "Analyzes the broadening of India's foreign investor base, noting a bias towards hedge funds/unregistered foreign investors who invest primarily via PNs.",
    "Investigates paradox: although tax arbitrage via capital gains tax has \"almost disappeared since July 2004\", demand for PNs has increased since that date.",
    "Suggests reasons for the continued buoyancy of the PN market and explains the possible impact from recent regulatory changes.",
    "PNs have been a significant conduit for portfolio flows into Indian equities for over a decade.",
    "The changing composition of foreign investors shows a bias toward hedge funds and unregistered foreign investors who rely on PNs.",
    "Despite the near elimination of capital gains tax arbitrage since July 2004, PN demand rose rather than fell.",
    "The paper articulates multiple reasons for persistent PN market activity and analyzes how recent regulatory changes could affect that market.",
    "Subjects: Capital gains tax, Currencies, Hedge funds, Securities, Stock markets",
    "Keywords: derivative instrument, hedge fund, investor, PN derivative leg, regulator, WP",
    "**_wp07291**"
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