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D-Day for P-Notes; SEBI will take a final call on P-Notes today

Thursday, October 25, 2007

Its a Decision day for the P-Notes issue. Regulator SEBI will take a final call on the P-Notes in a meeting today.

At present, there are 34 entities which issue P-Note in India. 14 FIIs and 20 Sub-accounts invest in the markets via P-Note. 18 Sub-accounts have submitted letter of intent to convert in FIIs.

FIIs & Sub Accounts:
FII Registrations: 1119
FII Sub-Accounts: 3447

P-Notes Issued (Rs Cr)
Morgan Stanley: 55,401
Merrill Lynch Espana: 47,928
Citigroup Global Mkts: 45,018
Goldman Sachs & Co: 34,771
CLSA Merchant Bankers: 24,388
* As on July 31st, 2007

FII Sub-accounts
Morgan Stanley & Co: 2
Citigroup Global Mkts: 2
Goldman Sachs: 1
CLSA Merchant Bankers: 1
UBS Securities Asia: 1

SEBI has softened its stance on proprietary Sub-accounts. SEBI proposes the conversion of proprietary sub-accounts to FIIs and has given a transitionary period for the conversion.

SEBI had given a time limit of 24 hrs to submit a letter of intent for the conversion and said that the application should be made within a week.
Only 15 to 20% of sub-account assets are actually proprietary. Many hedge funds come in the market via properietary book. It is unlikely that SEBI will bring PN assets under 40% limit.

Posted by FR at 9:36 AM  


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