All US trading/investing from india questions answered

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Also, a Notification was issued by RBI on 23rd October 2020 (to be called Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020), which mentioned the following (on Page 3) -

3. Prohibition

Save as otherwise provided in these regulations and any other regulations issued under the Act and in force on the date of commencement of these regulations, no person shall post or collect margin for derivative contracts and pay or receive interest on such margin without the prior permission of the Reserve Bank.

I have come across IBKR, which appears to allow buying options and deploying certain other option strategies to its Indian customers but after the new Notification from RBI, it seems even that would be not possible.

Please point out if anything else is relevant to the context of buying options. If not, one pays full cost of the option when one buys. There is no margin involved in buying an option on full premium. I agree an option is a derivative contract but a derivative contract is nowhere prohibited or restricted. Only outward remittance towards margin is prohibited. For example if you buy a futures contract at full price paying zero margin, is that prohibited? No. I didn’t know IBKR is doing it, but how does this notification or any other rule/law applicable to the situation restrain IBKR from doing it?

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I am not an expert in this domain. Your question yesterday is what triggered me to search more about this topic. That search led me to the October 23rd 2020 Notification. My knowledge about this topic is mainly derived from another thread related to this topic - Trading Derivatives in USA from India. That thread contains a lot of varying viewpoints about this (including forum members like @Pro_Trader1 filing an RTI to get clarification about this from RBI and SEBI). I had raised the query about buying options on that thread with context to the new Notification (no responses to that yet).

I too was of the opinion that option buying shouldn’t be an issue but after seeing the new notification, my view changed because it explicitly mentions about the prohibition of posting margin for derivative contracts (while precisely defining what terms like Derivative and Margin mean). Also, when I read post margin for derivative contracts, I understood that as the money one sends for buying a derivative contract. Again, I am neither a lawyer nor an expert in this domain and I can understand that someone else might interpret posting margin as meaning “sending money in case of margin call”. And like @Pro_Trader1 said in that other thread, it is best to get clarity about this from a person who is dealing with FEMA related matters/cases on a regular basis.

One other way to get clarity about this might be by asking IBKR directly about it. Because they are a reputed international broker and they would definitely have done their due diligence (including about FEMA) before providing this facility to Indian customers

Thanks for your effort. Because lot of experts don’t know what you say.

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they mentioned in circular trading of derivative products and leveraged not aallowed

correct. that makes buying options on stocks permitted. RBIs RTI reply posted on the other thread referred by Prayag above is also silent on options on stocks.

I tried to make transfer using HDFC bank net banking to purchase stocks to tasty. Hdfc bank refused to process transaction stating as beneficiary is using apex clearing, which they have prohibited. WeBull also uses Apex clearing to accept wire transfer. How did you make transfer?? Did you also withdrew money sometimes?? @lazy

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Bringing back money from foreign broker
Can somebody who has been trading in foreign equity regularly mention whether Indian Individual investors are required to repatriate proceeds from sale of foreign equity within 90 days ?

ICICI Bank requires this in a form for inward transfers from brokers

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