Trading Derivatives in USA from India

Has anyone tried withdrawing funds back to India from TD Ameritrade or IB? HDFC Bank has said to me that they will block any incoming wire from TD Ameritrade as it has been blacklisted by RBI.

Try icici

the idea of setting up a company offshore and circumventing lrs regulation is an interesting workaround.
@nithin said not recommended, grey area but theoretically possible.

however, found this while researching using lrs money to set up a company abroad.

1. Resident individual is prohibited from making direct investment in a JV or WOS abroad which is engaged in the real estate business or banking business or in the business of financial services activity.


  • rbi/ IT dept wont block anything, you are declaring the transfer reason as Equity investment but I guess the money will go into a margin account and not explicit cash account? In that case you are violating the rules and liable for penalty if audited.

IDFC First account UI looks good btw I see an upload document button.
Do you need to attach anything for your transfers as per the below link?

Lol man

i have studied some provisions of FEMA and LRS …
Capital account transactions are allowed to only if specifically allowed under to Fema act.
Current account transactions are allowed unless specified disallowed under the Fema act.

so Doing investment outside India comes under capital account transactions…

Schedule I of Foreign Exchange Management (Permissible capital account transactions) Regulations, 2000 includes the Classes of Permissible Capital Account Transactions for resident Indians
& this schedule include following point.

Investment by a person resident in India in foreign securities

also Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty is not allowed under LRS

Now provision under LRS is not disallowing from trading derivatives specifically…

** also under Schedule I** which include permissible capital account transactions includes another point … which is
Sale and purchase of foreign exchange derivatives in India and abroad and commodity derivatives abroad by a person resident in India.

SO forex derivatives and commodity derivatives are allowed for resident individual
just check this link of the website of RBI and read schedule 1

I dont know where its specifically… written that we cant buy stock options
Yes there is lot of confusion
So i thought why i should not ask RBI directly?

i filled RTI with RBI to get some information…

so i got following reply from RBI

investment is allowed (we already know)
and moreover commodity derivative is allowed for hedging purpose and RBI has issued some notification for the same.
and just see the answer of 2nd question
they said we don’t have information about this…


@nithin by seeing the answer from rbi what should we conclude. Specially to sexond question , does that mean dealing in foreign stock derivatives not in purview of RBI

i asked same questions to SEBI… they have not given any reply because they said that i am asking clarification not information…

Fema has not banned derivative trading specifically.
also Schedule 1 allows investment in foreign securities
Lrs Prohibits Forex trading outside India and also it doesn’t allow to take Leverage.
also from 26-02-2019 schedule 1 allows certain Forex and commodity derivative contracts (may be for hedging purpose)

You can read all above information from the website of RBI

Only RBI & any Fema expert can give us more clarification about this.
RBI also take queries related to Foreign exchange …I think that is better option for us to get accurate information.


As we know trading in leveraged products is not allowed under LRS, not sure what more info is required?

FEMA act comes under ministry of finance, ask them (RTI) about short selling a stock, buying optipns.

And if we don’t remit funds from India can we trade US derivatives (options)

And if we don’t remit funds from India can we trade US derivatives (options)
As long as Indian forex is not consumed, it might be ok (not a expert advice). Let us say, you get the money from your friend who is abroad, then it may not even come into picture.

For trading in derivatives, people could evey try out top step trader etc…

Would suggest to avoid TST?

Would IT Dept not ask questions if we open a partnership company, send money from India and bring back profts?

Institutional Investors or HNI or prop trading firms are allowed to trade in USA ?

Depends on what they are trading,what route they choose to etc.

Sending money out of India to trade is really tough. If you send it through LRS (liberalized remittance scheme), you can transfer upto $275k per year, but now there is a 5% tax collection on source for amounts above $10k. If you send it through LRS, you can invest but not do any derivative or margin trading.

As a company to send money out is again very tough. You could send it out to trade derivatives only if you are hedging some kind of business risk, otherwise you can’t really easily send it out only to trade markets.

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Any exemptions for AIF3 registered funds in India whose investment objectives is derivatives/swaps/stocks only.

I too had this question once upon a time

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My greetings go to you, I am curious to know what is the strike price of an option?

Can we trade options as that’s not a type of margin trading and which foreign broker’s are best for investing in usa from India