Investors can trade in US stocks from Oct

Ahmedabad: In a move that would boost retail participation at Gujarat International Finance Tec-City (GIFT City) in Gandhinagar, the NSE International Exchange or NSE IFSC, a wholly owned subsidiary of National Stock Exchange India Ltd, is planning to launch an initiative in October that will allow Indian investors to buy and sell stocks of 50 US-listed companies like Apple, Amazon, Microsoft, Alphabet, Tesla, Facebook and Netflix, among others.
To begin with, NSE IFSC aims to open 10,000 trading accounts, aimed at attracting millennials and HNIs. The entire trading, clearing, settlement and holding of US stocks will be in GIFT City under the regulatory structure of IFSC authority.
“We plan to start with 50 US companies listed in the S&P top 500. The selection of some of these will be based on their market capitalization, while in some cases, it will be on the basis of liquidity. Many of them are favoured by the millennial generation. In the first four months of this fiscal, the National Stock Exchange saw 50 lakh new registrations on its platform. A large number of them are youngsters whom we aim to draw to NSE IFSC for investing in US stocks,” said Ravi Varanasi, president of NSE Group. Currently, one can open an international trading account through any of the foreign trading platforms to invest in US stocks or buy international mutual funds.
With this new product, investors can hold the depository receipts in their demat account opened in GIFT City. The price discovery will also take place at NSE IFSC and arbitrage will also happen here in future. Depositories, banks and brokers have already started working with NSE IFSC to enable these investment products for Indian investors. About 60 broking firms have already set up their operations at GIFT City.. Zerodha, India’s largest trading platform by volume, is in the process of starting its operations at GIFT City and sees huge opportunity in NSE IFSC’s new initiative.
The initiative is said to be a first of its kind at IFSC where Indian retail investors will be able to transact on NSE IFSC platform under the Liberalized Remittance Scheme limits prescribed by the Reserve Bank of India to the tune of $250,000 (Rs 1.84 crore approx) per financial year. Investors will be provided with an option to trade in fractional quantity/value 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 Limited will offer its robust risk management framework, facilitate clearing as well as settlement of all trades in depository receipts and provide settlement guarantee in respect to all trades executed on the NSE IFSC platform.
“GIFT IFSC is becoming an important gateway for inbound and outbound investment. While we are seeing good growth in corporate business, the latest arrangement will allow larger retail participation in IFSC. We foresee GIFT IFSC becoming a household name with this new initiative and would bring in larger participation of intermediaries in IFSC,” said Dipesh Shah, Head Development, International Financial Services Centres Authority. He said the new initiative is expected to operationalize in October.
“The ecosystem of banking and capital markets at GIFT IFSC is growing fast. We have seen a surge in businesses such as AIFs, PMS and stockbroking firms. The introduction of new products on international exchanges will provide good opportunities to retail investors”
Tapan Ray, MD & Group CEO, GIFT City
“Presently, if you want to buy international stocks, you have to get into unregulated areas through a US broker. The business model offered by NSE IFSC will provide safe investment opportunity to Indian investors which is easy and cheaper”
Nithin Kamath, founder and CEO of Zerodha