Prop trading firms or cooperates are allowed to trade foreign derivative products

General
1

retail traders are not allowed to trade foreign derivative products ,is this rule apply to prop trading firms and cooperatives

2

Derivative products are allowed for hedging to Indian corporate using currency derivatives etc. But no, not for speculation. If some prop firm wants to trade, they will typically setup a different firm registered in that country and trade through that.

3

Yes, it is allowed for retail also. Please check interactive brokers india.
https://www.interactivebrokers.co.in/en/index.php?f=individualAccounts&p=overseas

4

It isn’t. The broker is not liable if you as an individual break the RBI/FEMA laws.

Check this circular on Liberalized remittance scheme (which has to be used for funding your international account).

> 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.

5

Thanks for clarifying… Link helps those who would want to check out Interactive !

6

Hi Nithin,

Is trading through Topstep Trader allowed from India Legal perspective?

Thanks

7

If you get funded to trade, I don’t see any legal issues. But I don’t think topstep will fund traders outside the US or markets they cover.

8

Hypothetical question…

FEMA seem to state that you can not transfer INR (from India) to margin accounts for trading out side India. I came across a person who got a freind in US who could transfer the money to a SKRILL a/c which then was connected with a trading a/c. Since the money is not transfered from India, he says(believes) it is 100% legal. Any thoughts.

BR

9

I mean you could do it, but taxation and everything can be an issue with this. The friend in US will have to pay taxes and then give back the money. But this is possible, there is no way legally to restrict this as well.

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