Also known as Participatory Notes, P-notes by their nature are opaque to Indian regulatory bodies. This was an investment instrument which was favored by foreign institutional investors (FIIs) due to this very nature. There was a lot less scrutiny on where the funds were coming from and who the real investor was. P-notes are a cousin of exchange traded funds (ETFs) which also do not make it easy for regulators to know who is invested into it and what the source of funds are. The brokerage houses did not need to know much details on the source of funds. It was also used by high networth individuals (HNIs) who were evading taxes in their home countries such as US, Canada, UK and the like. Most of the institutions that were issuing these securities are registered in tax havens. The large players in this trade include Goldman Sachs, Morgan Stanley, CLSA, Citigroup and Merrill Lynch. So what happened, why are these P-notes starting to hit the Indian markets you ask? The answer is that now t...