Participatory Notes are investments made in the markets using derivative instruments through the FII and their identity is anonymous. The government has tried to place to put a cap on the money routed by PNs in order to mderate the inflows. SEBI said the number of FIIs and/or sub-accounts issuing overseas derivative instruments had more than doubled to 34 from 14 in March 2004. SEBI proposed that FII sub-accounts should stop issuing PNs and should wind up their positions over 18 months.
Sebi has also proposed to assign an incremental rate of 5% for issue of participatory notes for FIIs with less than 40 pct of assets in such notes, while those with over 40 pct of assets in PNs can be issued only against redemptions or cancellations.
It was a dramatic and extremely important day for the markets as they hit the lower circuit stopped trading for an hour but showed remarkable recovery and ended off the lows. But the loss was fairly reasonable as compared to turmoil it saw in the opening trade. With more clarification in the statements by Sebi on Paticipatory Notes led to the recovery.
Sensex ended down over 300 points, recoverig 1400 points from the day's low.
No comments:
Post a Comment