Trading Derivatives in USA from India

F&O
22

Did you check with Interactive Brokers India? They seem to allow individual traders to trade on overseas markets using a cash account.

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23

Buying stocks is not an issue. It’s trading in derivatives or anything that requires a margin a/c that’s causing an issue. And yes, I have an active interactive brokers india a/c.

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24

My bad, indeed it’s a margin account that is required. Wonder why so much restrictions a trader has to face in India.

25

long back i had an account with Smith Barney . By default selling options were allowed and helpdesk guys clarified that to enable option wriitng i need to have minimum 25k USD in the account and need to have some prior experience in derivatives…
not sure about the current scenario… but my guess is derivative trading for retail ahs got many restrictions

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26

I am currently based in Netherlands but would be moving back to India soon. Would it be illegal if I fund my margin account using the Euro account I have currently and then continue trading from India?
I can keep my Euro account active even after moving to India. I would keep enough liquid cash in my margin account to avoid a margin call.

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27

U might have legal issues once u are an Indian citizen. But as long as u are a NRI (holding a OCI card), and have nationality of other country, there should be no issues. You’d be subject ot the host country’s rules on this matter.

Do note though resident indians as per indian laways are those who stay in India for a conntinuous period of 12 months
Whether this applies to NRI is unknown

Therefore, suggest u contact a professional CA in India regarding these matters.

And if u wish to give up ur Abroad citizenship,m then u have to close the margin acc along-with it. SInce Indian citizens can’t trade margin accounts outside india.

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28

Welcome to India.
Where Modi talks about generating employment, and bureaucrats in various branches of govt (Incl SEBI/IT) do retrograde moves

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29

Hi Namit - did you explore the option of opening a proprietorship or small company in a foreign jurisdiction, and using that route to legally trade on margin on overseas exchanges, and TraderVenk had suggested in his Sep 2017 post? Thanks.

30

Yes I did. Did not find anything better than the options mentioned in this forum. Still, I might be wrong, do share with us if you find anything better :slight_smile:

31

Hi Namit. I’d like to share an alternative path which looks attractive to me. NSE has announced an extension of trading sessions till late night. This would start later this year - October if I’m not mistaken.

Assuming the transition happens, I would like to believe that activity in S&P futures could see a big increase. They are listed on the NSE. At the very least, this would help us trade the S&P 500 and FTSE live.

Cheers!

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32

Sure I will.

Did you actually explore opening a company in an offshore jurisdiction? If so, what was your take away?

33

Hi Nitin, I have been reading about Indian citizen trading on international exchanges for quite some time now and every road leads to the same destination. It is illegal to trade in any margin products outside india. buying stocks is legal but buying or selling futures is illegal. It is crystal clear as of now. But what is not clear and maybe a possible loophole (maybe) is buying options (calls and puts). Like in India, when you buy a call or put, you pay the full price (quantity * premium) therefore its not technically using margin. Selling options is definitely using margin. But buying options ??? Would that be considered a margin / leveraged product ? What is your view point on that.

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34

Hi Priyank,

Even though you are buying options by paying only the premium, if you look at it rightly you are entering into a large value contract by paying a small amount called premium and this also is considered leverage or a margin trade.

Cheers,
Lindo

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35

Yep, this would be considered as a leveraged product.

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36

Hi namit
Did you get any response from any free zones of uae? Any luck on this option? Please share details
Thanks
Raghavendra

37

Hi Nithin,

  Are Indians allowed to do day trading in US stocks? If we don't use leverage, is it allowed legally?

Also, it looks like there are no futures for individual stocks in US exchanges. They have only options. Am I right?

Thanks,
Ragavendran

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38

I have posted a similar query here: Can i trade the s&p emini futures from india without funding from ind?
would be great if anyone could answer it

40

you cant trade futures, but what about options, since there is no margin required while buying option premiums

41

Hi namitjain2890,

Thanks you brought up this discussion here, Its so sad that we cant trade the most developed markets from india.

All of you guys seem to agree on the suggestion made by TraderVenk, However i have doubts

  1. Is it legal to carry out margin trading in the name of the company set up aborad, I thought even this route is illegal.
  2. If you set up a company abroad, are there any restrictions on the nature of transactions to be carried out by the company.
  3. You still have to submit the audited transactions of the company , if the indian authorities require it , can it lead to problems
  4. Is it possible to remit funds for margin trading under RBI approval route ?
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42

As per FEMA … Person resident in india includes:

Any person or body corporate registered or incorporated in India.

• An office, branch or agency outside India owned or controlled by a person resident outside India

• An office, branch or agency outside India owned or controlled by a person resident in India.

So, do you still think we can go this " setting up a company " route