@AB1 Not sure if you understood it correctly. What Zerodha is saying that the onus is on you if you do not close the position before April 5th. You will be responsible to show compliance with FEMA laws if asked for by any agency in the future.
Certainly! Letâs delve deeper into the concept of âvalid underlying contracted exposureâ with some examples:
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Importing Goods from the US:
Imagine a retail trader in India who runs a small business importing electronic gadgets from the United States. The trader needs to pay for these goods in US dollars. Due to currency fluctuations, the trader faces the risk of the INR depreciating against the USD, which would increase the cost of importing. To mitigate this risk, the trader enters into a foreign exchange derivative contract, such as a forward contract, to lock in a favorable exchange rate for the future payment. Here, the underlying exposure is the actual import of goods from the US, and the derivative contract is used to hedge against currency risk associated with this business activity. -
Exporting Services to Europe:
Consider a freelance web developer based in India who provides services to clients in Europe. The developer invoices clients in euros and receives payments in euros. However, the developerâs expenses, such as rent and utilities, are in INR. Fluctuations in the EUR/INR exchange rate can impact the developerâs profitability. To manage this risk, the developer may use a currency swap or a currency option to hedge against adverse exchange rate movements. Here, the underlying exposure is the foreign currency earnings from providing services to European clients, and the derivative contract helps mitigate the currency risk associated with these earnings. -
Investment in Foreign Stocks:
Suppose an individual retail trader in India invests in foreign stocks listed in the US stock market. The dividends and capital gains from these investments are in USD. However, the investorâs home currency is INR. Currency fluctuations can affect the value of these investments when converted back to INR. To protect against exchange rate volatility, the investor may use currency futures or options to hedge the currency risk associated with their foreign investments. In this case, the underlying exposure is the investment in foreign stocks, and the derivative contract serves to manage the currency risk inherent in these investments.
In all these examples, the retail traders have genuine business activities or investments that expose them to currency risk. They use derivative contracts as risk management tools to hedge against this risk, thereby ensuring that the use of derivative contracts is aligned with legitimate business needs and not speculative in nature.
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Question. Investing in nasdaq 100 via india mutual fund motilal oswal nasdaq100, is consider Investment in Foreign Stocks or not?
Answer
Investing in the Motilal Oswal Nasdaq 100 Mutual Fund, which tracks the Nasdaq 100 index, can be considered an indirect investment in foreign stocks. Hereâs why:
Underlying Assets: The Motilal Oswal Nasdaq 100 Mutual Fund primarily invests in securities that are part of the Nasdaq 100 index. The Nasdaq 100 index consists of the 100 largest non-financial companies listed on the Nasdaq stock exchange in the United States.
Investment Objective: The objective of the mutual fund is to provide returns that closely correspond to the performance of the Nasdaq 100 index. This means that the fundâs performance is directly influenced by the performance of the Nasdaq 100 companies.
Global Exposure: Since the Nasdaq 100 index comprises major U.S.-based technology and growth-oriented companies, investing in this mutual fund provides exposure to the U.S. stock market and the global technology sector.
Regulatory Perspective: From a regulatory standpoint, investing in a mutual fund that tracks foreign indices like the Nasdaq 100 is generally categorized as an indirect investment in foreign stocks. This is because the mutual fund poolâs underlying assets are predominantly composed of stocks listed on foreign exchanges.
Risk and Return: Investors in the Motilal Oswal Nasdaq 100 Mutual Fund benefit from diversification across a basket of leading U.S. companies, potentially reducing specific company risk while gaining exposure to the growth potential of the technology sector and other industries represented in the Nasdaq 100.
However, itâs essential to note that while you indirectly invest in foreign stocks through this mutual fund, your investment is managed by Indian fund managers within the framework of Indian regulatory and tax environments. This can simplify the process for Indian investors looking to access global markets while leveraging the expertise of professional fund managers.
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what about MON100
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In this post you mentioned âwe will have to resort to closing positionâ but now you are mentioning zerodha will not square of any existing position. Please clarify.
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In their 2nd message they said they will allow to carry positions but the consequences will be on client, if any,
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path of hope
Whoever this @Mr_M is, I can detect the AI content from a mile away.
So looks like this platform is doomed as the broker itself.
No moderation to kick the shit out,.
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I think he just asked chatgpt and pasted the answer here. Not like he is a bot.
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Can we invest in this to qualify for the declaration form for currency exposure?
koi batao, nasdaq100, from motilal oswal, qualify or not as exposer
Hoping for the same!
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This would not just be helpful, but will actually potentially save the entire segment and stabilize the mispriced optionsâ premiums
Please do confirm on priority. Thanks!
For those who have or are willing to build up exposure in offshore MF-
Lot size of 1 USDINR contract is $1000 or Rs 83.50 k.
Say, If you have open positions of 100 lots , the notional INR Value is Rs 83.50 lakh. So, You should have justifiable holding of 83.50 lakh +/-10% of offshore MF to compensate for 100 lots. That is the real meaning of hedge.
Now, if you have Rs 83.50 Lakh holding in a single overseas asset class and you are following this post, then your positions will be much higher than 100. 
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F&O is also made for Hedging Purposes so why should RBI NSE want underlying currency to trade in currency ban all the F&O Segments one of the worst and Pathetic decisions made by the SEBI and RBI. The govt does not want to see any retail traders making a profit in the share market 
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Can other brokers who are not giving the option of declaration to clients square off the existing positions suo moto without confirming whether the client has any underlying contracted exposure ?? Declaration option not given by other brokers then how can they auto sqaure off existing positions on 04 Apr EODâŚ
SIR kya amm insan 100-200 lot wala trade kr payega currency me ya nhi ?
there canât be equal vale of hedge, in equity also there is a risk even after hedge, itâs wall of bush no solid protection, search - dictionary meaning of hedge
We will not. We will let users decide and close positions themselves.