Sebi cracks the whip on P-notes to check black money
Markets regulator Sebi today proposed to levy a regulatory fee of $1,000 for each P- Note issued by foreign investors and bar issuance of such derivative-based instruments for speculative purposes to check any misuse of these products for channelising black money.
The proposed measures, which follow a slew of other steps taken by the regulator in the recent past, come at a time when the value of foreign investments through Participatory Notes or Offshore Derivative Instruments (ODIs) has already fallen to a four-month low of about Rs 1.68 lakh crore.
While such investments used to account for more than half of overall foreign portfolio investments at one point of time, their share has now fallen to just 6 per cent. Still, concerns remain that P-Notes are misused by some to channelise black money from abroad into the country through the stock markets.
In a consultation paper issued today, Sebi said it has been continuously making regulatory changes in order to ensure that the ODI route is not misused.
“These changes however, require investment in manpower and systems in order to make quick analysis of the voluminous data being submitted by the ODI issuing FPIs. Sebi incurs a significant expenditure in terms capital and manpower …read more
