Is it legal to trade stocks in USA's stock exchanges as an Indian citizen?

[siva]

@vishalkhemchandani

Hi Nithin, any updates on this?

A month more.

[bihitayim]

@shivam_patil

I live in India.

This platform has been in the news lately, for Indian investors wanting to buy stocks in the US.

Invest in US Stocks from India & alternative assets with Vested

[Riyas_Ahamed]

Ok i dont want to go any other website to invest in US market, zerodha will come very soon to invest in USA market , we can go through zerodha , its safe

[Gnk123]

As an Individual, Can i purchase stocks in Foreign Excchanges like US Markets and sell on the same day (Day trading)? Are there any restrictions related to the same from RBI?

[Mani_Kan_Dan]

@anjanbabu

is it really that good and better than the Indian markets?

1. Diversification
2. INR depreciates overtime against the USD
3. Option to buy some good companies.

[Vikram_Rao]

It should be taxed in India only; since we don’t have foreign tax identification number.

I get shares or Restricted stock units (ESOP) from my company around 25 to 30 shares every year which gets vested during October November time frame and my company shares are traded in NYSE and when it gets vested I have an option to pay the tax by money or I can choose to withhold shares. I will be taxed flat 30% after which based on tax slab I get refund in my payroll.

We use E-Trade to sell those shares (only to sell)

[vishalkhemchandani]

it’s been 2 months now, any updates on ETA?

[siva]

@Gautam

I think zerodha should refrain from suggesting a time period if not adhering to it. Months have turned to over a year. Also same is the case for other things, the basket or 20k limit issue for instance, was said to be resolved or a workaround provided, at the month’s end time, If I quote correct but since then multiple months have passed with nothing more than soon and more of we are still working on it.

We expect the things to be delivered on time but yes planning can go for a toss due to unforeseen events and mostly from regulatory and compliance point at-least in our industry. Coming to US markets, it is straight forward to offer US equities but the way we are trying to do is little different and involves some regulatory approvals which is taking time. To give you one example, remittance of funds(both payin and withdrawal) will cost 15 to 40 USD ie 1050 to 2800 in Rupees for per transaction per user.We are trying to find a solution for this which is taking time.
Increasing 20k limit also involves some backend changes but this is almost done, should be available soon.

[HSL]

What is the 20k limit problem issue?

[HSL]

Such , quantity limit restrictions is in cash equity only OR also in futures options ?
And why such restriction ? What is the logic purpose of it ?
Is it a requirement of the nse or sebi law or is it broker’s own personal choice ?
And why 20k ; why not 15k ; why not 25k ?

[siva]

@HSL

quantity limit restrictions is in cash equity only OR also in futures options ?
And why such restriction ? What is the logic purpose of it ?
Is it a requirement of the nse or sebi law or is it broker’s own personal choice ?
And why 20k ; why not 15k ; why not 25k ?

You can read that thread and post your queries on that, also please don’t spam every thread.

[siva]

Hey, this thread is for US stocks, you can post your queries on limits on per order in that respective thread, please don’t spam this forum.

[Mehdi_Abbas]

From upstox

[Riyas_Ahamed]

wow , upstox realy very fast when comparing zerodha , they bring everything on time really need to appreciate,

still zerodha is working for very long time , for Margin funding , us stock investing , chart trading , etc , nothing i seen @siva any news about new products

[siva]

@Riyas_Ahamed

still zerodha is working for very long time , for Margin funding , us stock investing , chart trading , etc , nothing i seen @siva any news about new products

We are doing internal testing on trading from charts.
US investing will be available soon, most likely we will be addressing the remittance part which is otherwise so costly for retailers to invest in US markets, not sure what other broker will be doing for that.
Margin funding will take some time.

[trader29]

@nithin came across an another brokers, they are allowing to open an cash account for US trading.

Just have this query that RBI haven’t said derivatives are banned in foreign exchange via LRS but “margins or margin calls to overseas exchanges / overseas counterparty, are not allowed under the Scheme.”

Now is it possible to only Buy call/put Options using a cash account? does that also be considered as margin calls as premium is paid upfront?

can you please clarify. thanks

[nithin]

@trader29

Now is it possible to only Buy call/put Options using a cash account? does that also be considered as margin calls as premium is paid upfront?

This is a grey area. US markets also gives you access to leveraged and short ETFs, even Crypto ETFs. Nothing explicitly prohibits these, but if you look at someone like Interactive brokers who are regulated by SEBI as well, they have blocked trading in all of these for Indians. So I am guessing their stance is based on their understanding of the local laws here. The brokers who allow trading in these are those who are currently not regulated by SEBI.

So yea, donno. But it is always better to take a conservative approach on these if something seems grey.

[trader29]

Yes from a service provider/business perspective I understand if aint explicitly defined to be legal, avoid.
but thanks for clarifying that its in grey area.

[Prayag]

@nithin I had a doubt about this. I came across a post on a different thread that mentioned that Interactive Brokers allowed buying options (and deploying certain other options strategies) in the cash account. The poster was also skeptical if this was in accordance with LRS. After that, they asked Interactive Brokers multiple times, who confirmed that it was in compliance with LRS. Given that Interactive Brokers has done their due diligence on this matter, would you suggest it is all right to go ahead with it?

The post I am talking about -

@namitjain2890

I think since many people are interested (already got a few DMs), i’ll just name the broker. I spoke with Interactive Brokers some 4-5 months back. First they had listed the types of options that can be traded in Cash accounts by Indian residents, I thought they wrongly just copy pasted the US page in India, and honestly it was copy pasted. But then I called then and confirmed twice, and reminded them about LRS. They still said we are aware, you can do everything that’s allowed in a Cash account. I checked FINRA rules, and they mentioned Options are allowed in cash account, where the entire risk is covered, so cash secured puts and covered calls are obviously allowed. I think even LRS would’t restrict that. For vertical spreads they mentioned that the option has to be European styled cash settled, so I found only SPX and may be a few other indices that fit that criteria.

This research was done some 4-5 months back and was very limited so I did not save links to my research. I’ll try to find those rules and post it here. I think the FINRA rules can be easily found. Not able to find the page on IB’s website as there website is a mess. Apart from the homepage, the entire website is a mix of Indian and US pages. Navigation is difficult.

Edit: Just went through IBs website, they have changed a few things with navigation. Will try to find it.

Edit: Good luck. I forwarded this page to someone months back, whatsapp had it backed up. here’s the IB link,
https://www.interactivebrokers.co.in/en/index.php?f=38144&p=tradingrequirements

[Prakhar_Agrawal]

@nithin little bit off topic question but what if someone breaks this law , what are the consequences ,I think there would be first warning by regulator or some monetary penalty , there is no way that person would be punished further tthis . Or has rbi mentioned what are the penal provisions if person knowingly/unknowingly violates this