The NSE International Exchange (NSE IFSC), a wholly-owned subsidiary of the National Stock Exchange (NSE), will soon introducing trading in select US stocks, it said on August 9.
The trading would be facilitated through the NSE IFSC platform, a press release stated, adding, "the offering will be in the form of unsponsored depository receipts. IFSCA has facilitated the same under the Regulatory Sandbox."
The entire trading, clearing, settlement and holding of US stocks will be under the regulatory structure of IFSC authority, it further said.
"This initiative is a first of its kind at IFSC where Indian retail investors will be able to transact on the NSE IFSC platform under the Liberalized Remittance Scheme (LRS) limits prescribed by the Reserve Bank of India (RBI)," NSE IFSC said.
Notably, the LRS framework of RBI permits resident individuals to remit up to $2,50,000 per financial year for any permitted current or capital account transaction.
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"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," the stock exchange added.
Investors will be provided with an option to trade in fractional quantity/ value when compared to the underlying shares traded in US markets, it said.
"The proposed framework will make US stocks affordable to Indian retail investors," NSE IFSC noted.
NSE IFSC Clearing Corporation Limited (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, it said. 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, the statement added.
NSE IFSC will announce the operational details shortly and will launch the product at the earliest possible time, it further said, adding that depositories, banks and brokers have already started working with NSE IFSC to enable these investment products for Indian investors.
Vikram Limaye, MD and CEO of NSE, said the introduction of trading in US stocks through NSE IFSC will be one of the key milestones for the stock exchange.
"With the guidance of IFSC authority and the support of all the key stakeholders involved, we hope to operationalize this product soon," he said.
Tapan Ray, MD and Group CEO of GIFT City, said 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," he said.
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