Global Investing

General
44

Awesome.

  1. Would Ireland domiciled ETFs(traded on LSE) be available?
  2. Is it possible to transfer international stocks from other brokers to you?
45

We will start with which are available in US only, in case if any Ireland tracking ETF listed in US then they will be available.

Possible.

1 Like
46

I guess these became popular to avoid harsh US estate taxes ( U.S. persons (non-citizens who aren’t U.S. residents) are subject to U.S. estate tax on assets (more than 60k USD) that are considered “U.S. situs assets” at the time of death.)

@siva , could you comment this? How are the holdings in this new Global investing product structured? Are they US situs assets?

1 Like
47

It will track US. But domiciled in Ireland. This is mainly for tax purposes. I’m not sure if it’s traded on US exchanges though.

https://www.bogleheads.org/wiki/Nonresident_alien_investors_and_Ireland_domiciled_ETFs

48

Not just estate tax though. Dividends are taxed at 25% TDS. If you’re paying more than 25% in income tax, I think you can then claim it back under DTAA(If not, I think that is lost forever). But compliance and forms are still hard with dividend distributing ETFs… not to mention frequent input usd/inr and bank fees. AFAIK, US has no dividend accumulating ETFs. Ireland has 15% dividend TDS from US treaty(lost forever as well), no estate tax and accumulating ETFs.

49

Partnership firm ?

50

I had a few questions:

  1. Who would be the custodian for the stocks/ETFs?
  2. Is the investment flow similar to platforms like INDmoney or Vested?
  3. Are there any specific benefits for Indian investors by routing investments through GIFT City?
  4. Will the platform assist with the required taxation documentation, similar to other platforms?
  5. Will SIP investments be supported?
51

Any Indian broker offering US investing basically opens account with US broker in backend. The shares sit with the US broker and you’re the beneficial owner.

You fund the account through broker partnered banks at market rate and then buy US stocks and ETFs. Fractional shares allowed across all platform. GIFT City dunno much, doesnt make difference for retail.

Yea can do SIP on US stocks n ETFs on indmoney. Reports are given separately for US investing, final tax filing and all still on us.

52

Does INDMoney allow leveraged ETFs or commodity ETFs or BTC ETFs?

53

Yes you can find leveraged ETF’s & commodity ETF’s but no BTC etf’s might be due to some regulatory restrictions.

1 Like
54

@siva I don’t think we can trade/invest Leveraged ETFs from India?

55

From India, you can’t buy leveraged ETFs on Indian exchanges due to SEBI restrictions.

However, Indian residents can invest in US-listed leveraged ETFs via foreign brokers (like Interactive Brokers or platforms using LRS).

So it’s not allowed domestically, but allowed overseas if the broker and remittance route support it.

56

FEMA prohibits outward remittance under LRS by resident Indians to trade in derivatives.
Does a leveraged ETF count as a derivative instrument in this scenario?

57

While everyone is discussing whether buying leveraged ETFs is even allowed, I’m sitting here calmly holding my inverse leveraged ETF bought yesterday.

2 Likes
58

So, it’s confirmed that It is possible in practice.

But, do you also happen to know / have any references on whether it is legally permitted?

59

All other transactions which are otherwise not permissible under FEMA and those
in the nature of remittance for margins or margin calls to overseas exchanges/
overseas counterparty are not allowed under the Scheme.

RBI Master Direction 7/ 2015-16. Guess someone from Zerodha can confirm

60

I could only find vague references in the actual FEMA act against margin trading. FEMA is divided into like 36 sections/chapters each with it’s own regulations, rules and directions. I looked over

Foreign Exchange Management (Overseas Investment) Directions, 2022 (dated August 22, 2022)
(This is not act, regulation or rule or notification, but " direction")
Master Directions - Reserve Bank of India

As per my understanding, investment would be OPI:

(ix) “Overseas Portfolio Investment (OPI)” means investment, other than ODI, in foreign securities. The following is further provided:

a) OPI shall not be made in:

any unlisted debt instruments; or

any security which is issued by a person resident in India who is not in an IFSC; or

any derivatives unless otherwise permitted by Reserve Bank; or

any commodities including Bullion Depository Receipts (BDRs)

I’m not even sure whether this applies or whether this is the actual provision that limits derivatives trading. But no one seems to be talking about “commodities”, if so.

e) The investment (including sponsor contribution) in units of any investment fund overseas, duly regulated by the regulator for the financial sector in the host jurisdiction, shall be considered as OPI. Accordingly, in jurisdictions other than IFSC, listed Indian companies and resident individuals may make such investment. Whereas in IFSC an unlisted Indian entity may also make such OPI in units of an investment fund or vehicle, in terms of schedule V of the OI Rules subject to limits, as applicable

Because leveraged ETFs is “units of any investment fund overseas, regulated by the regulator for the financial sector in the host jurisdiction”, I think it is not directly derivatives/commodities and therefore allowed.

In any case, it’s a complete mess. India could use a simpler regulation system instead of a bazillion acts, each with it’s own regulations, rules, circulars, notifications and directions.

62

I think @siva said something about Q1 or Q2 next FY

1 Like
63

We are targeting before next quarter end.

Yes, that is the plan.

3 Likes
64

Will gift city mutual funds ever be on Coin? Is that allowed?