The NSE International Exchange (NSE IFSC), a wholly owned subsidiary of the National Stock Exchange of India Ltd (NSE), has announced that trading in select US stocks will soon be facilitated through the NSE IFSC platform.
The offering will be in the form of unsponsored depository receipts. IFSCA has facilitated the same under the regulatory sandbox, said a company statement.
The entire trading, clearing, settlement, and holding of US stocks will be under the regulatory structure of the IFSC Authority.
This initiative is a first of its kind at the IFSC where Indian retail investors will be able to transact on the NSE IFSC platform under the Liberalised Remittance Scheme (LRS) limits prescribed by the Reserve Bank of India (RBI).
The business model offered by NSE IFSC will not only provide an additional investment opportunity to the Indian investors but also make the entire process of investment easy and at a low cost.
Investors will be provided with an option to trade in fractional quantity or value when compared to the underlying shares traded in US markets. The proposed framework will make US stocks affordable to Indian retail investors.
NSE IFSC Clearing Corporation Ltd (NICCL) will offer its robust risk management framework, facilitate clearing and settlement of all trades in depository receipts, and provide settlement guarantee in respect to all trades executed on the NSE IFSC platform. Furthermore, all the trades will also be covered under the investor protection framework at NSE IFSC.
Investors will be able to hold the depository receipts in their own demat accounts opened in GIFT City and will be entitled to receive corporate action benefits pertaining to the underlying stock.
NSE IFSC will announce the operational details shortly and will launch the product at the earliest possible time. Depositories, banks and brokers have already started working with NSE IFSC to enable these investment products for Indian investors.
NSE MD & CEO, Vikram Limaye, said: “This will be an innovative product, and one of the key milestones for NSE IFSC that will expand the product coverage of the Exchange beyond existing clientele. The product enables resident individuals to easily and cost effectively invest in US stocks under the LRS framework of RBI (which permits the resident individuals to remit up to USD 2,50,000 per financial year for any permitted current or capital account transaction).”
“With the guidance of IFSC authority and the support of all the key stakeholders involved, we hope to operationalise this product soon,” Limaye said.
GIFT City MD & Group CEO, Tapan Ray, said that GIFT City is emerging as a financial gateway of a country for investment in India and globally and the ecosystem of international banks, international exchanges and capital market intermediaries have been growing rapidly at GIFT City.
“It is the right time to get such an innovative product especially from an Indian perspective; we have seen over a period that Indians have started investing in global stocks. We congratulate NSE IFSC for this new endeavor and wish them a great success,” Ray added.