Trading Derivatives in USA from India

Can one with NRE and NRO accounts, short sell stocks in the us equity markets??? @nithin
i want to open a margin account with TradeZero

hmm… if u r an NRI, I guess you can.

Hi Karan
Did you try opening offshore company ?
I think that is the best way to do this…
Raghu

No…i havent tried that route yet…i talked to some offshore company formation agents…cost to setup a company is around 1000 $…you can setup a company in panama, belize, seychellas or other similer juridictions…thereafter annual cost of operating the company is about 900 $ per year…and you need to add a nominee director which they will provide for 570 $…you can choose not to add nominee director service…but it is necesary to further increase your privacy…nominee director will do all processes like opening a bank account, opening a brokerage account…there are some tax benefits also…

I havent talked to local adviser about this…if you find more information about it…please share it here.
I think this is possible…and as long as we are not transecting millons of dollars…we should be fine…:grinning:

Hi Karan,

  Can you provide details of these offshore company agents? 

Thanks,
Ragavendran

Sure…these are some of the companies i contacted…
www.sfm.com
www.wwincorp.com


www.offshoreww.com
Fidelitycorporate.com
There are several others i contacted but i cant remember them on top of my head…:grinning:
Be careful as some of these can be fraud…
Hope this helped…

1 Like

@nithin @siva apologize for asking the same question. I worked and lived in the US. My earning I left them in accounts such as E trade. Do you think it is ok to sell Cash Secured Puts ? For one this is not related to LRS and second cash secured puts are not margin. Are they ? Feel free to give me your opinion , any other relevant FEMA cases from Live law , practical advice … etc…

I applaud the fantastic work done at zerodha .

I am an Indian citizen and a complete Indian resident by both IT and FEMA definitions

Siv

I am not an expert on this, but I think if you can trade derivative or not is based on your resident status. If you are an Indian, I think the rule applies that you can’t use your foreign money for margin trading.

@somnath248 can we try getting some info from our lawyers and share here?

@nithin thank you nithin @somnath248 would love to hear the opinion of your lawyers . As far as read the money earned by you is covered by FEMA section 6(4). And this has no constraints on it.

But then there is the practical side of the implementation.

Also many US MNC s like Microsoft Intel etc offer stock options to their Indian employees. And in some case while executing the options there will be outflows of money. How is that governed

Would be grateful to receive your thoughts. Cash secured puts and covered calls are some low risk low reward ways to income small income. Wondering if it is possible to do so.

Siv

Hey Siv1,

As far as I know, trading/investing of any scrips/instruments in the US with income/source of money that is generated from outside India or kept in your FCNR (or such similar) Account should be fine. It is only when you are remitting money that is earned in India to the US under LRS, you will not be permitted to trade in margin/leverage or forex products.

Remitting money to purchase stock options are not leveraged/margin products, so it should be fine remitting such money under the LRS itself.

3 Likes

there is no limit until you have cash settled, cash needs to be settled before you sell, for settled cash you can buy and sell immediately

Hi quicko team, I guess considering you’re a tax team you might have idea about this? thanks for the answer!

I want to know if intraday trading in US market (stocks) using cash account(no margin) is legal or not?
Because RBI has not mentioned anything related to this!

If yes under what income will it fall if not capital gains?

Hi @somnath248,

I know someone who earned money in Canada and the money still resides in his Canadian bank account. Now he is an Indian resident, if he trades in US exchanges on margin, should he pay tax in India or US or Canada?

Thanks,
Ragav

Is it legal to trade in funded account provided by firms like Topsteptrader or earn2trade in emini future from india where we dont have to use our fund & work on 80:20 profit sharing ratio in favour of traders.
( https://www.topsteptrader.com/ )

You mean 80% profit sharing and funds are provided by them, it’s insane

This made me curious about something. If a person earns money in USD (via freelancing, etc) and finds a way to remit that money directly into a USA-based trading account rather than remitting it to their Indian bank account first & then via LRS to USA. Would that be considered legal or will it fall into some gray area?

ya check their model. They hardly risk anything

The trader’s 5000 usd are still in stake !!! Check the video on that website …

Personally these kind of stuffs looks like nothing more then bucket shop to me

true but u can withdraw it if u wanna close ur a/c. So that is ur investment to continue trading & that money is earned on funded a/c. not deposited by you.
But still not clear whether trading such funded a/c is legal or not. If ny1 doing this plz guide.