The NSE International Exchange (NSE IFSC) on Monday said trading in select US stocks will soon be facilitated through its platform.
The Exchange will soon announce the operational details and will launch the product at the earliest possible time, NSE IFSC said in a statement.
It further said depositories, banks and brokers have already started working with NSE IFSC to enable these investment products for Indian investors.
According to the Exchange, the offering will be in the form of un-sponsored depository receipts. The International Financial Services Centres Authority (IFSCA) has facilitated the same under the regulatory sandbox.
The entire trading, clearing, settlement and holding of US stocks will be under the regulatory structure of IFSC Authority.
This initiative is a first of its kind at IFSC where Indian retail investors will be able to transact on the NSE IFSC platform under the liberalised remittance scheme (LRS) limits prescribed by the Reserve Bank of India (RBI).
The business model offered by NSE-IFSC, a wholly-owned subsidiary of the NSE, will not only provide an additional investment opportunity to the Indian investors but also make the entire process of investment easy and at a low cost.
Investors will be provided with an option to trade in fractional quantity or value when compared to the underlying shares traded in US markets.
The proposed framework will make US stocks affordable to Indian retail investors.
NSE IFSC Clearing Corporation Ltd (NICCL) will offer its robust risk management framework, facilitate clearing and settlement of all trades in depository receipts and provide settlement guarantee in respect to all trades executed on the NSE IFSC platform.
Furthermore, all the trades will also be covered under the investor protection framework at NSE IFSC.
Investors will be able to hold the depository receipts in their own demat accounts opened in GIFT City and will be entitled to receive corporate action benefits pertaining to the underlying stock.
"This will be an innovative product, and one of the key milestones for NSE IFSC that will expand the product coverage of the exchange beyond existing clientele," NSE managing director and CEO Vikram Limaye said.
According to him, the product enables resident individuals to easily and cost-effectively invest in US stocks under the LRS framework of RBI (which permits the resident individuals to remit up to $250,000 per financial year for any permitted current or capital account transaction).
"It is the right time to get such an innovative product especially from an Indian perspective; we have seen over a period that Indians have started investing in global stocks," GIFT City MD and Group CEO Tapan Ray said.
Photograph: Danish Siddiqui/Reuters
