Retail investors can trade directly in the derivatives of eight US stocks from Thursday.
The NSE International Exchange (NSE IFSC), located at GIFT City, Ahmedabad, commenced trading on the platform from Thursday, with the hours same as that in the US markets — from 8pm till 2.30am (IST).
Initially, investors can get their hands on 8 stocks: Alphabet (Google), Amazon, Tesla, Meta Platforms, Microsoft, Netflix, Apple and Walmart.
The number will increase gradually and extend to top 50 US stocks at a later date.
At present, domestic brokerages are offering the facility of investing in overseas stocks and exchange traded funds (ETFs) to their clients. For instance, HDFC Securities has tied up with Stockhal Inc, whereas ICICI Direct has joined hands with Interactive Brokers llc.
Early IFSC data for Thursday showed maximum trading in Amazon whose depository receipts were being traded at $15.17 apiece. Alphabet was trading at $13.58, Apple at $ 6.70 and Meta $4.17.
The investment in the NSE platform will come under the Reserve Bank of India’s (RBI) liberalised remittance scheme under which individuals can remit up to $250,000 in a financial year.
Investments will be considered as a foreign asset, with short-term capital gains taxed at slab rates and long-term gains at 20 per cent with indexation.
Investors will have to first register with a broker who is registered with the NSE IFSC.
At present, there are 39 such brokers registered with the bourse.
They will have to convert the rupee amount into dollars and transfer the sum to the account of the brokers and start trading.
Investors will not get the actual shares of the company — they will "unsponsored depository receipts’’.
The market makers will buy shares in the US and issue receipts.
The bourse has stipulated a ratio for each shares. For instance, one share of Tesla will be equivalent to 100 NSE IFSC receipts while one share of Amazon will be equivalent to 200 IFSC receipts.
No margin trading
The NSE IFSC has stipulated that brokers cannot offer margin trading. Funds equivalent to 100 per cent of transaction value which include trade value, transaction fee, brokerage should be available with the trading members before any trade is executed on their behalf.
