Sir SPX means S&P 500 index??
Yes. There’s also SPY which is SPX divided by 10. But that’s and ETF and the options for those are American Style and physically settled.
Just please answer one more query
How legally we can trade options in foreign market
See you can do covered call if you have equivalent shares in cash market in interactive brokers no problem
This whole thread is based around the 1 question you asked. Please read through it.
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I had cash account with them in the past, did only stock daytrading with it.
were u able to do sell and buy in intraday ?
Yeah ofc, no shorting or margin allowed, only your settled cash!
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@siva @namitjain2890 Any info about trading US options from a Resident Foreign Currency (RFC) Account?
I found this at the bottom of the page: Reserve Bank of India - Frequently Asked Questions
The funds in RFC accounts are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment outside India.
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Hey Surya,
The RFC account is generally an account opened to receive foreign currency from the earnings made by services rendered outside India/to a person who is not a resident Indian or from any Export related activities generally, or a NRI may keep it in such an account while returning back to India permanently or from gifts. This is not money that an Indian would be remitting from India towards another country or converting from rupees to another currency.
Any money from this account can be used freely and will not have any LRS related restrictions (such as margin based products & options). In case a US based broker does allow you to link the RFC account, you should be legally allowed to trade options. But I’m not sure whether it would be easy for a US based broker to verify your bank details & do the third party verification check to make sure the account belongs to you (this check is required by brokers everywhere to follow anti money laundering rules). We, at Zerodha, generally do a penny drop verification (send across 1Re to your account to verify your name) and match it with your name as per KYC/ID details.
Hope this helps.
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@somnath248 Good to hear this. I work remotely and receive USD as a wire transfer to my domestic savings account. One of my bank staff recommended a foreign currency account which I assume is this: https://sbi.co.in/web/personal-banking/accounts/saving-account/resident-foreign-currency-domestic-account
Why would it be difficult for a US broker to verify this bank account?
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Hi, Just wanted to check if someone has successfully established a company abroad (Singapore, Dubai etc) AND is trading derivatives in USA/Global Markets?
I am clear on the process for getting a company established in Singapore but I am unsure on this one aspect as of now “CAN ONE REMIT MONEY FROM INDIA TO HIS COMPANY IN SINGAPORE FOR MARGIN TRADING/LEVERAGE/FNO”?
I am attaching a page from RBI LRS QnA which seems to indicate that this cannot be done.
BUT DOES THIS HOLD TRUE EVEN IF YOU START A BUSINESS ABROAD ?
Please do let us know here. Will be grateful if i can get in touch with the person to gain guidance.
I think the money probably will be transferred to buy the shares of the company that is setup abroad, not for margin trading. What the company does shouldn’t be a concern from my understanding. And sending money to buy shares for a foreign company is allowed as far as I know
I think it is doable, since establishing abroad would essentially make your company a foriegn entity and you would no longer be covered under FEMA.
What if i use my investment profits to trade in derivatives?
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Not allowed.
Hey everyone,
I have a way and I was hoping if you guys could tell me whether it is legal or not.
What if I register a business in USA under my name and open a bank account for that business and I transfer my money to that bank account, now using that bank account to open a trading account with some broker and then paying the taxes there and then bring the money back to India. Will it work?
- yes you can open a Delaware LLC remotely with a PO box address & open a US current account also thro company formation experts.
- You could define a broad range of activities including investment advisory & trading etc.
- You can open easily a margin a/c withTD waterhouse in your company name with you as operational director (your passport+ PAN will be your ID as indivual ) & company TIN for uS taxation.
- Wiring money from India (you need minimum balance of $25000 to open margin account to trade futures & options & extra cushion $25000 to trade. Wiring $50000 from your INR sb account to your own company usa co bank account is the first hurdle. Not impossible but you have to jump tho many hoofs.Not all banks do.
- you can trade anything in USA (cash equity, forex via futures at CBOT/CME, equity options ,index options etc .
- main problem as Nithin pointed out is -if you are asked by Indian IT authorities to provide your US company’s balance sheet & P&L account. Then your trading activities will show which is against FEMA rules.
- I have traded 15 years at TD waterhouse & IB . But funding was from HK/US accounts & I was a NRI.
8.If you have a relative in US/UK/singapore/Dubai etc , you can form a patnership company , open a trading a/c as LLC . - Funding from India 1st problem. 2nd problem when you bring back the profits (if you are asked how you made this money & provide details.
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This is definitely one of the options to consider to trade overseas derivatives, and it looks Legal as you are transferring money to buy overseas equity, this will mostly be a Overseas direct investment and you will probably have to send the funds through the ODI route.
As a rule , however , you also have to submit the balance sheets of the company you are investing in, and if the authorities dig further, it becomes quite apparent that you have set up this company only for the purpose of trading and no other business activity has been done in this company. I don’t know, how will the indian authorities treat this , you will probably have to fight it legally if they think that this is just a shell company with no business. Request others to pitch in here, about what they think about this point.
FEMA also doesnt allow you set up a company for any activity related to financial services ( trading for self is not financial service ) , but its another question to keep in mind , you will have to choose the type of business when you are creating a company.
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