SEBI reins in PNs, but makes room for Others: "There there will be no impact on markets, and if there is, it is a buying opportunity.”: "The eccentricities of the FM and Damodaran will at last find place in the current issue of Guinness Book of World Records"--believe me this is (n...t) a rumour!!! Lol: Are we moving towards the License Raj of 1970s?? As long as there is a regressive Political Outfit supporting the UPA such "Tughlokian laws" will continue to haunt Indian Economy and its Jurisprudence.This type of regressive outfits have never allowed its Proletariat to live in peace, throughout the world: Those who (read FIIs) will want to "eat the cake baked in the India Growth story", will do that in any way, whether P-notes are, "to be or not to be": Have you heard of any major "Brothel" getting closed in India, inspite of so many laws on Human Trafficking??? But one positive thing is that, phasing out of P-notes will reduce the transaction cost of the Foreign Brokerage Houses:

Give away with one hand, and take back some of it with the other. That’s the upshot of the much awaited Sebi announcements on Thursday which laid down the new rules of the game for foreign funds playing Indian stock market. While SEBI has decided to allow more foreign investors like pension and university funds and charitable trusts to directly put money in local stocks and, also relaxed the definition of “broad-based” sub-account — a vehicle used by well-heeled overseas investors to enter the Indian market, it has barred FIIs from issuing participatory notes (PNs) to unregulated entities. Thus, PNs — which are derivative instruments issued by FIIs to overseas investors who can’t or don’t want to invest directly — can now be sold only to foreign entities which are “regulated” in their respective jurisdiction, and not to those who are merely “registered.” This would mean that several hedge funds, most of which are unregulated, would not be able to participate in the Indian market through PNs. This is a significant move because many hedge funds that operate out of the US and invest in India are not regulated in their home country. “This is not the last set of decisions regarding foreign investments in India. We decided that FII regulations should be re-examined keeping three things in mind; allowing greater access to overseas investors, introduction of more products, and looking at the cost competitiveness of India compared to other markets,” Mr Damodaran told the media after the Sebi board meeting on Thursday. The regulator has also decided to give “Permanent Registration” to FIIs, instead of a renewal every 3 years. How will the market react? Some of the foreign brokerages ET spoke to said, new money flow will slowdown since even if an FII has an headroom to issue fresh PNs, it can be only up 5% of their assets under custody. “...it will impact the pace of flows significantly. The extent of how much these measures will aid in moderating capital flows will depend on how SEBI conducts itself. A lot of hedge funds, HNIs and others who will not be able to satisfy SEBI criteria now have two options. Either go through an application process or run around finding capacity, which may not happen.,” said Alok Sama, founder and president of Baer Capital Partners, a private equity investor which is planning to register with Sebi as a hedge fund. But, leading investor Rakesh Jhunjhunwala feels “there will be no impact on markets, and if there is, it is a buying opportunity.”