Trading Derivatives in USA from India

[nithin]

@Mayur_P

@nithin @namitjain2890 Please correct me if i am wrong.

yep, according to me you are correct.

@Mayur_P

In above article example is given for derivative trading account carried out in UAE or Singapore. So it is possible to trade in global derivative markets if you are Resident of India but not citizen of India.

yep, I think should be possible.

@Mayur_P

I guess only option you have to trade in US/Europe Future & Option is to buy citizenship of other country and then come back to India(if want to live in India) if you have that much capital.

lol, yeah, maybe.

[Gigatech]

hello, do you trade in usa options as indian resident from cash account? have you been paying global taxes here in india and was there an issue with it? Thank you

[beluga123]

Any lead guys?
I myself tried creating a dummy account with tastyworks and tradestation. Both did not work as the moment you mention that you are from India, the system automatically prohibits from creating margin account. If you mention you are from US, you need to provide US address (for the company as well as the individual operating it).
If you want to go with Charles Schwab, they require a minimum of $250k for US-LLC account. My only hope now is IBKR and any shitty futures broker which are a rip-off if you want to move funds.

[zdfan]

No! It’s not possible. FEMA 1999 prohibits Margin Trading.

[aaridrakamanu]

I am trying to legally do this. I have shares vested out of ESPP in foreign broker account. This is not sent through India/LRS. I am hoping this is good for trading CSP and CC options. What I find tricky is where to show this loss/gain in ITR? Capital gains is for equity and underlying buy/sell price accounts for this.

[Kumar_P]

“money from India using LRS shouldn’t be used. Money/Salary in netherlands can be used for european markets I guess no issues. Check local law applicability”.

@trader29 Thanks for the clarification. Are we sure about this? I’m in similar position where I trade USA F&O using money earned in US and going to keep it there when I move to India and become resident Indian. Can I still continue trading the same? Any reference that we can use, in case some trouble occurs in future?

[aaridrakamanu]

Any help here? The money I hold is in terms of RSU/ESOP in Schwab and there is atleast 25k$. I am planning to play with covered calls and secured puts with these stock vests. This I believe should be legal and is not out of LRS and fully tax paid. My question is how to show the losses/gains in ITR? @nithin

[nithin]

@aaridrakamanu

Any help here? The money I hold is in terms of RSU/ESOP in Schwab and there is atleast 25k$. I am planning to play with covered calls and secured puts with these stock vests. This I believe should be legal and is not out of LRS and fully tax paid. My question is how to show the losses/gains in ITR? @nithin

Yep, grey area. No real way to show gains of covered calls or puts on in your ITR.

[Dayanand_Shetty]

one way would be to open a bank account in Dubai, then have a relative/friend who lives outside of India transfer that money to the Dubai bank account, then those funds would not be LRS. use those funds to trade derivatives, u can always transfer the money to u friend

[Optimizer]

I have similar question to that of aaridrakamanu

Let’s say I have stocks of foreign company as part of RSU. Two questions which I have:

1. If I sell those stocks, will it come under LRS? As it was part of salary but vested outside India. What all rules/law applicable on such stock ownership.

2. If it comes under LRS or not, is it legal to buy leveraged/inverse ETF?

[Dr_Kiran_R]

Did you get a response to your RTI?

[SanjayKShetty]

@namitjain2890 did you ever figure out a viable solution?

[deepak_jain2]

Read the section K where it is clearly mentioned on RBI website(Reserve Bank of India - Notifications) that Indians can invest in foreign derivatives(stocks and options), mentioned below in a simplified language in section K

Schedule I outlines a list of “Capital Account Transactions” that can be undertaken by “Persons Resident in India.” These transactions involve the movement of funds or assets between India and other countries.

Here’s a breakdown of the listed items:

• a) Investment in Foreign Securities: Indian residents can invest in securities (stocks, bonds, etc.) issued by foreign companies.
• b) Foreign Currency Loans: Indian residents can borrow money in foreign currencies, both within India and from foreign lenders.
• c) Transfer of Immovable Property Abroad: Indian residents can sell or transfer real estate (land, buildings) located outside India.
• d) Guarantees Issued: An Indian resident can provide a guarantee to support a debt or obligation of a foreign resident.
• e) Currency Transactions: This covers the export, import, and holding of foreign currencies (notes and coins) by Indian residents.
• f) Loans/Overdrafts (Borrowings): Indian residents can borrow money from foreign residents.
• g) Foreign Currency Accounts: Indian residents can maintain accounts in foreign currencies both within India and in foreign banks.
• h) Foreign Insurance Policies: Indian residents can purchase insurance policies from insurance companies located outside India.
• i) Loans/Overdrafts (Lending): Indian residents can lend money to foreign residents.
• j) Remittance of Capital Assets: If an Indian resident owns assets abroad (like property or shares), they can remit the proceeds from the sale of those assets back to India. Schedule I outlines a list of “Capital Account Transactions” that can be undertaken by “Persons Resident in India.” These transactions involve the movement of funds or assets between India and other countries.

Here’s a breakdown of the listed items:

• a) Investment in Foreign Securities: Indian residents can invest in securities (stocks, bonds, etc.) issued by foreign companies.
• b) Foreign Currency Loans: Indian residents can borrow money in foreign currencies, both within India and from foreign lenders.
• c) Transfer of Immovable Property Abroad: Indian residents can sell or transfer real estate (land, buildings) located outside India.
• d) Guarantees Issued: An Indian resident can provide a guarantee to support a debt or obligation of a foreign resident.
• e) Currency Transactions: This covers the export, import, and holding of foreign currencies (notes and coins) by Indian residents.
• f) Loans/Overdrafts (Borrowings): Indian residents can borrow money from foreign residents.
• g) Foreign Currency Accounts: Indian residents can maintain accounts in foreign currencies both within India and in foreign banks.
• h) Foreign Insurance Policies: Indian residents can purchase insurance policies from insurance companies located outside India.
• i) Loans/Overdrafts (Lending): Indian residents can lend money to foreign residents.
• j) Remittance of Capital Assets: If an Indian resident owns assets abroad (like property or shares), they can remit the proceeds from the sale of those assets back to India.
• k) Undertake Derivative Contracts: This likely refers to the ability of Indian residents to enter into derivative contracts (like futures, options, swaps) related to foreign assets or currencies.

[Arpan]

Can an Indian citizen open a bank account in Dubai ?

[pavinjoseph]

Yes, if you’re a resident over there!