The Securities and Exchange Board of India (Sebi), tweaking the position it had taken in its earlier draft on Foreign Portfolio Investors (FPI), has tightened the rules for issue of participatory notes (P-notes). The regulator had barred only Category-III FPIs from issuing P-notes in the draft guidelines that were part of its October board meeting agenda. However, the gazette notification, which has given the FPI framework an official status, also bars certain entities under Category-II from issuing P-notes. The regulator is taking the position that P-notes should be issued only to entities that are regulated in their own rightIn November 2013, the notional value of P-notes on equity, debt and derivatives stood at Rs 1.82 lakh crore, or 13 per cent of assets under custody of foreign institutional investors.