The Hindu Business Line : FIIs can issue PNs to entities supervised by regulatory bodies

THE Securities and Exchange Board of India today clarified that foreign institutional investors (FIIs) can issue Participatory Notes (PNs) to entities that are regulated by either a central bank, securities commission or a stock exchange.

According to the circular issued by the market regulator, offshore derivatives instruments (or PNs) can be issued to an entity that is regulated, authorised or supervised by a central bank like Bank of England, the Federal Reserve, the Hong Kong Monetary Authority, the Monetary Authority of Singapore or any other similar body provided that the entity must not only be authorised but also be regulated by these regulatory bodies.

PNs can also be issued to an entity regulated, authorised or supervised by a securities or futures commission like Financial Services Authority (UK), the Securities and Exchange Commission (USA), the Commodities Futures Trading Commission (USA), the Securities and Futures Commission (Hong Kong or Taiwan), Australian Securities and Investments Commission (Australia) or other securities or futures authority state or territory.

Any entity that is a member of securities or futures exchanges like the New York Stock Exchange, London Stock Exchange, Tokyo Stock Exchange, NASD (USA) or other similar self-regulatory securities or futures authority or commission within any country, state or territory provided that these organisations are ultimately accountable to the respective securities or financial market regulators can also invest in the Indian equity market through PNs.

In addition, an entity incorporated in a jurisdiction that requires filing of constitutional or other documents with a registrar of companies or comparable regulatory agency or body under the applicable companies legislation in that jurisdiction. PNs can also be issued to individuals or entities like fund, trust, collective investment schemes, investment company or limited partnership whose investment advisory function is managed by any of the regulated entities.

Officials at top broking firms said that with this clarification a large portion of hedge funds that operates from the US can invest through PNs in India. "It may be 100 per cent, but a majority of hedge funds can invest now in India," said a top official of a foreign broking firm. He said most of the hedge funds in the US are not registered with a stock exchange or Securities Commission but are registered either as proprietary firm or partnership either in various states of US or at a local authority. However, he said PNs could not be issued to individuals that are not regulated.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Pvt airlines allowed to fly to Colombo — UAE carrier to operate flights from Abu Dhabi

Rural wealth yet to be tapped, says Jaswant

Cabinet clears DA merger proposal for Govt staff

BSES told to stop offering rebates

IPCL issue oversubscribed on opening day

ITES jobs to grow 45 pc: Nasscom

FIIs can issue PNs to entities supervised by regulatory bodies

`IFCI merger with PNB may miss deadline'

Ford plans `religious tourism project' in Bengal — Vedic planetarium in Mayapur on cards