Is it necessary to register as an NBFC when forming a company to trade in the markets?

I am a full-time day trader and am planning to form a company. But When I tried to register the company the consultant said that if the company’s objective is to deal with financial assets then it should be formed as an NBFC company.

I do not wish to deal with public money. I intend to trade intraday in Futures, Options and commodities. Can someone please clarify if this is the case.

Check this thread

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I also have a similar query. If an individual wish to become a broker with NSE, only for EQ and MIS. What are the requirement and procedure.

From a look at NSE website, it seems the total deposit be 75L, and 10000/- yearly + taxes ? It also talks about 2 yrs of experience as an assistant /clerk… But how about those managing own portfolio through existing brokers…

NSE has something called alpha membership for people who don’t intend to run a brokerage business. I have explained here

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No, it is not necessary to register as an NBFC (Non-Banking Financial Company) if your company’s objective is to trade in the markets using your own funds and not accepting deposits or managing money on behalf of others.

Key Points:

  • NBFC registration with RBI is only required if the company is involved in:

    • Lending

    • Accepting public deposits

    • Managing client funds

    • Providing Financial services to others

  • If you’re forming a company solely to trade in Futures, Options, commodities, or equities with your own capital, and not offering investment services to clients, then NBFC registration is not required.

  • You can register your company as a Private Limited Company or LLP with appropriate object clauses in the Memorandum of Association (MoA), such as:

    • “To invest and deal in securities and derivatives in secondary markets for the company’s own account.”

Important:

  • Avoid phrases in your MoA like “portfolio management” or “investment advisory” unless you plan to obtain SEBI or RBI licenses.

Consult a CA or CS who understands financial market entities to draft the MoA properly. Seek Help from Setindiabiz Experts.