A note that is used by investors to gain exposure (participation in the upside) to an equity investment, such as common stocks and warrants, in a local market where foreign investors cannot have direct ownership due to a ban imposed by law or regulations. In addition to accessibility to closed markets, it represents a cheaper option to direct investment by reducing registration and transaction costs relating to local registered shares. The note derives its value from a basket of underlying equity securities, and irrespective of any fees and expenses,  it reflects the performance of the underlying securities on a full correlation basis in terms of the potential gains or losses associated with the investment.

The participatory note represents unsecured, unsubordinated contractual rights belonging to the issuer, but doesn’t not provide any right, title or interest in connection with the underlying equity securities or any rights against the issuer of these securities.

A participatory note may also denote a participating note (specifically, a participating capped floating rate note).

It is also known as a P-note or PN.