How to form a company/partnership/LLP/Pvt Ltd for trading and investment in securities in India and also work in overseas trading in different countries?

General
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I’m enthusiastic to starting a proprietary trading firm in India (its my goal). Here are some questions I have to ensure I’m following the proper legal guidelines:

Legality: Is there any legal barrier to opening a prop trading firm in India?

Business Structure: When it comes to choosing a business structure, what are the pros and cons of a One Person Company (OPC), a Limited Liability Partnership (LLP), and a Private Limited Company (PLC) for a prop trading firm? Are there tax
implications to consider when choosing a structure?

NBFC License: Is it mandatory to obtain an NBFC (Non-Banking Financial Company) license for a prop trading firm? If not, are there any benefits to having one, such as access to additional financial products or services?

Regulatory Approval: I’ve heard conflicting information about whether registrars approve LLPs and OPCs solely engaged in F&O (Futures & Options) trading and speculation. Can you clarify the regulatory stance on this specific activity?

Any SEBI approval?

I think you guys got my vision : in short I want to start company like Jane Street, Tower reserach Captial, Graviton capital

I know its don’t realistic goal but Big dream, even if it’s tough. Giving it my all to make it real.

@nithin
Plz answer me

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Have answered this a few times already.

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Sir, even your brief clarification will be very helpful for me.
Sir Please don’t ignore
@nithin

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If you want to pull other people’s money, you must follow one of the legal routes mentioned in the post.

If it is your own money, then no problem.

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@nithin what are issues if some one who trades in private limited company goes for NBFC registration? Do they deny it ? Assumption using own money

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If you have your own money, why take the private limited route? NBFC isn’t easy to get or manage due to compliances.

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@nithin Can you provide a simple route map to start a proprietary trading firm (not collecting funds from the public; I would like to start with my own money with some dev teams)? Do I need to get some NOC from SEBI or exchange? What is the best way to establish an Algo R&D firm?

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You don’t need anything from SEBI or exchange if you are doing it on your funds.

But the issue is starting a company or partnership to do this. The best way would be to start with your personal account and see how it goes.

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Yeah, I am currently doing it through my personal account. Once I build a strong foundation, I am planning to establish a trading firm with a strange profit sharing logic.

Lazy in terms of huge profits or corporate logic. Hopefully.

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I’m curious- would a Berkshire style holding company be allowed in India? Basically a company whose entire focus is investing? Or would this be classified as a NBFC by the RBI increasing the compliance to the point it simply isn’t worth doing.

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Can you create a bot to answer this specific query? Saves you time and energy. Love your zeal and patience though.

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Yeah they will have to essentially be an NBFC or brokerage business (after the recent change in regulations that allows brokerage firm to hold companies). But if they have a core business that is contributing atleast 50% of their income, then they can do it without the license of an NBFC or brokerage. For example Infoedge with its holding of Zomato, Policy Bazaar, and etc.

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Ah, it won’t be real then. :slight_smile:

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