After Sebi crackdown on P-notes, most hedge funds may take FPI route

Some might find this unviable and opt out; impact clearer in some weeks

A majority of hedge funds which came in through the participatory notes (p-notes) route are preparing to register themselves directly as foreign portfolio investors (FPIs).

Last week, the Securities and Exchange Board of India (Sebi) had issued a circular banning p-note holders from taking naked exposure to the derivatives market. It said all existing positions would have to be squared off by the end of 2020 or date of maturity of the instrument, whichever was earlier.

On Monday, FPIs requested Sebi for a three-month extension to roll over their July positions. Sebi hasn't said it would.

Most stock derivative contracts