Participatory Notes (PNs) are financial instruments that are issued by banks, broker-dealers, and other financial institutions and are used to invest in securities that are listed on a foreign exchange. PNs are also known as "unlisted offshore derivative instruments" or ODIs. They are typically issued in countries where the underlying securities are not available for purchase by foreign investors, or where the regulations for purchasing the securities are more restrictive.PNs are similar to other financial instruments, such as futures contracts or options, in that they allow investors to speculate on the price movements of the underlying securities. However, unlike futures and options, PNs do not have a standardized structure and are not traded on an exchange. Instead, they are customized agreements between the issuer and the investor, and are typically issued in large denominations.PNs have been controversial in some countries because they can be used to evade regulations, including taxes and disclosure requirements, and because they can be difficult to value and regulate. In some cases, PNs have been used to launder money or to engage in other illegal activities. As a result, many countries have taken steps to regulate the use of PNs and to increase transparency in the ODI market.
