Indian retail investors will be able to trade in US stock exchanges from today (04 Mar 2022) via the subsidiary of NSE, which operates in Gujarat International Finance Tech (GIFT) City.
NSE IFSC (NSE International Exchange) will allow users to trade in US securities in the form of Unsponsored Depository Receipts for 8 US giants namely Amazon, Tesla, Alphabet, Meta Platforms, Microsoft, Netflix, Apple, and Walmart. As and when time permits the exchange is planning to increase the number of companies to 50 in a phased manner.
Let us understand about NSE IFSC and also on NSE IFSC receipts.
NSE IFSC is a fully owned subsidiary of NSE incorporated on 29th November 2016. NSE IFSC offers trading in a wide variety of products including index derivatives, stock derivatives, currency derivatives, and commodity derivatives denominated in USD.
NSE IFSC receipt is a financial instrument, a derivative product that would allow an investor to trade in stock directly. Here exchange is allowing a fractional investment in US stocks and issue receipts against the stocks, referred to as NSE IFSC receipts.
Advantage of investing
- Investors will be provided with an option to invest in US markets fractionally either in value or quantity. This will make an investment in the US affordable for Indian retail investors.
- Easy accessibility of US markets to explore the avenue in dollar terms and in the giants of the US.
- Investors can hold the depository receipts in their Demat accounts opened under GIFT city.
- Corporate benefits can be enjoyed by holding fractional shares.
How to invest
Investors need to open a Demat account under NSE IFSC, funds can be transferred under the Liberalized Remittance Scheme (LRS) as per the norms of RBI and the maximum amount that can be invested is limited to $250,000 per year (approx. Rs 1.9 crores).
How taxation works
As we will be investing in US stocks, they will be considered as foreign assets and short-term capital gains will be taxed at the slab rate and long-term capital gain will be taxed at 20%
Ticket size and market timings
The minimum ticket size is $0.01 and timings would be 8:30 PM to 2:30 PM the next day, daylight saving will be applied and timings would be changed accordingly.
Settlement cycles and derivatives trading
The settlement cycle will be T+3 days and there is no derivatives trading facility.
It will reflect as per the US trading holidays, with some Indian holidays considered.