Why does Truebeacon not trade abroad?

[vivek]

@zerodha @nithin I came across an interview by Nikhil regarding truebeacon, the CAT-3 AIF product launch.

Was just wondering why don’t you trade F&O in the US markets. Why only stick to India when, I believe, CAT-3 AIFs can trade abroad? Aren’t the markets abroad much more liquid and capable of absorbing way more capital than what’s available here in India?

[Prayag]

I think there are lots of restrictions even on Category III AIFs when investing overseas. There is a post in a different thread which explained this

@sagar.m

Checking the SEBI circular no. CIR/IMD/DF/7/2015 referred to over here: https://www.sebi.gov.in/legal/circulars/oct-2015/guidelines-on-overseas-investments-and-other-issues-clarifications-for-aifs-vcfs_30772.html , point 2.B.c. states that

i. AIFs may invest in equity and equity linked instruments only of offshore venture capital undertakings, subject to overall limit of USD 500 million (combined limit for AIFs and Venture Capital Funds registered under he SEBI (Venture Capital Funds) Regulations, 1996).

iii. For the purpose of such investment, it is clarified that “Offshore Venture Capital Undertakings” means a foreign company whose shares are not listed on any of the recognized stock exchange in India or abroad.

iv. Investments would be made only in those companies which have an Indian connection (e.g. company which has a front office overseas, while back office operations are in India).

So, it is pretty limited and not very useful. Also commodities are not mentioned, whereas the biggest commodity exchanges with the highest liquidity in the world are in the US.

After reading the above post, it seems that AIFs can’t even invest in companies which are listed on foreign exchanges.

Also in a recent article, it was mentioned how SEBI is scrutinising overseas investments made by AIFs and has turned down applications proposing to make substantial investments outside of India

[vivek]

@Prayag

After reading the above post, it seems that AIFs can’t even invest in companies which are listed on foreign exchanges.

That sucks big time. So the only way is to migrate.