Use of Participatory Notes in Indian Equity Markets and Recent Regulatory Changes
AbstractThis 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.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 07/291.
Date of creation: 01 Dec 2007
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- Shah, Ajay & Patnaik, Ila, 2008.
"Managing capital flows: The case of India,"
08/52, National Institute of Public Finance and Policy.
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