Retail investors can now purchase and sell certain US equities on the NSE IFSC (NSE International Exchange), a wholly-owned subsidiary of the NSE. “From March 3, trading for eight US-based equities will begin. Unsponsored Depository Receipts (UDRs) would be used to trade the equities, ” the NSE IFSC said in a circular.
Domestic investors would first be able to invest in Google, Amazon, Tesla, Facebook, Microsoft, Netflix, Apple, and Walmart, among other famous US firms. The NSE IFSC will later expand this service to include 50 US equities.
“The date of start of trading for the remaining NSE IFSC Receipts on certain US Stocks will be communicated by way of separate circular,” the NSE said.
NSE IFSC Limited, which began operations on June 5, 2017, provides extended trading hours for various products, including Index Derivatives, Stock Derivatives, Currency Derivatives, Commodity Derivatives, and Debt Securities.
Starting Thursday, the NSE IFSC will enable trading in eight chosen US equities, with the number of stocks increasing to 50 in the near future. Under the RBI’s LRS structure (permits the resident individuals to remit up to USD 2,50,000 per financial year for any permitted current or capital account transaction).
Hemang Jani, Head Equity Strategy, Broking and Distribution, Motilal Oswal Financial Services Ltd, discusses how the new NSE IFSC service works and helps individual investors.
Hemang Jani explains that stock trading would take the form of Unsponsored Depository Receipts, which implies that market makers will acquire shares in the United States and issue receipts against them. One share of Tesla, for example, will be worth 100 NSE IFSC receipts, whereas one share of Amazon will be worth 200.
Benefits of NSE IFSC Trading for Retail Investors:
The NSE IFSC platform has a number of advantages, including the ability to trade in fractional quantities.
“It provides Indian investors with a new investment option with a simple investment process and inexpensive costs. When compared to the underlying shares traded in US markets, it also allows for fractional quantity/value trading. Furthermore, investors will be able to store depository receipts in their own GIFT City Demat accounts and will be eligible for corporate action advantages related to the underlying stock, “Jani explains.