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Which of the following is issued by registered foreign portfolio investors to overseasinvestors who want to be part of the Indian stock market without registering themselvesdirectly?
- a)Participatory Note
- b)Commercial Paper
- c)Promissory Note
- d)Certificate of Deposit
Correct answer is option 'A'. Can you explain this answer?
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Which of the following is issued by registered foreign portfolio inves...
Participatory Notes are Overseas Derivative Instruments that have Indian stocks as their underlying assets. They allow foreign investors to buy stocks listed on Indian exchanges without being registered. The instrument gained popularity as FIIs, to avoid the formalities of registering and to remain anonymous, started betting on stocks through this route.
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Which of the following is issued by registered foreign portfolio inves...
Participatory Note:
Participatory Note is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly. Here is a detailed explanation of Participatory Notes:
Definition:
- Participatory Notes, also known as P-Notes, are financial instruments used by investors to invest in Indian securities without undergoing the hassle of direct registration with the market regulator, Securities and Exchange Board of India (SEBI).
Issuance:
- Registered Foreign Portfolio Investors (FPIs) issue these notes to overseas investors who want exposure to the Indian stock market.
- These notes are like promissory notes and give the holder the right to receive the returns from the underlying securities.
Regulations:
- SEBI closely monitors the issuance and trading of Participatory Notes to ensure transparency and prevent money laundering and tax evasion.
- FPIs issuing these notes need to comply with SEBI regulations and report the details of the underlying assets to SEBI periodically.
Benefits:
- Participatory Notes provide a convenient way for foreign investors to invest in the Indian market without facing regulatory hurdles.
- It allows foreign investors to access the Indian market's potential returns without direct registration.
In conclusion, Participatory Notes are an important tool for foreign investors looking to participate in the Indian stock market indirectly. They offer convenience and flexibility while ensuring regulatory compliance and transparency.
Participatory Note is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly. Here is a detailed explanation of Participatory Notes:
Definition:
- Participatory Notes, also known as P-Notes, are financial instruments used by investors to invest in Indian securities without undergoing the hassle of direct registration with the market regulator, Securities and Exchange Board of India (SEBI).
Issuance:
- Registered Foreign Portfolio Investors (FPIs) issue these notes to overseas investors who want exposure to the Indian stock market.
- These notes are like promissory notes and give the holder the right to receive the returns from the underlying securities.
Regulations:
- SEBI closely monitors the issuance and trading of Participatory Notes to ensure transparency and prevent money laundering and tax evasion.
- FPIs issuing these notes need to comply with SEBI regulations and report the details of the underlying assets to SEBI periodically.
Benefits:
- Participatory Notes provide a convenient way for foreign investors to invest in the Indian market without facing regulatory hurdles.
- It allows foreign investors to access the Indian market's potential returns without direct registration.
In conclusion, Participatory Notes are an important tool for foreign investors looking to participate in the Indian stock market indirectly. They offer convenience and flexibility while ensuring regulatory compliance and transparency.
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Which of the following is issued by registered foreign portfolio investors to overseasinvestors who want to be part of the Indian stock market without registering themselvesdirectly?a)Participatory Noteb)Commercial Paperc)Promissory Noted)Certificate of DepositCorrect answer is option 'A'. Can you explain this answer?
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