Sebi stands ground on P-notesBS Reporter / Mumbai October 26, 2007Regulator approves all draft proposals, simplifies registration procedures.The Securities and Exchange Board of India (Sebi) on Thursday stuck to its ground on the issue of restricting participatory notes (P-notes) and virtually retained all the clauses that were put up for public comment last week.Speaking to reporters after the Sebi board meeting, Chairman M Damodaran said foreign funds will have to register in India before investing in P-notes or sell their holdings within 18 months. The new rules will be enforced with immediate effect.The regulator also barred the issuance of P-notes tied to derivatives.P-notes are securities linked to equities used by investors who cannot trade directly in the Indian market. Last week, Sebi had suggested restricting their use to curb burgeoning capital flows into the country. In the spot market, foreign institutional investors (FIIs) will not be allowed to issue P-notes that were more than 40 per cent of their assets under custody. The
