Indians can now invest in international stocks through NSE IFSC
The NSE-owned IFSC is located in GIFT City, Gujarat's first International Financial Services Centre. Stock exchanges in GIFT City are allowed to offer securities trading in any currency other than the Indian rupee.
On March 3, the NSE IFSC began trading unsponsored depositary receipts in eight US equities, including Alphabet, Amazon, Tesla, Microsoft, and Netflix. It will be gradually increased to 50 in the future.
The IFSC Authority will be in charge of the trading, clearing, settlement, and holding of US stocks. For the next nine months, the product will be in a regulatory sandbox. During the sandbox testing period, the number of investors who can be onboarded is limited to 10,000.
Investors will be able to keep their depository receipts in their own GIFT City demat accounts. They would be able to transact on the NSE IFSC platform within the Reserve Bank of India's Liberalised Remittance Scheme (LRS) restrictions.
LRS allows Indian citizens to send up to $250,000 outside of India in a single financial year. In its capacity as the NSE IFSC Receipts Custodian, HDFC Bank's International Banking Unit issues an NSE IFSC Receipt based on underlying securities issued by a U.S. listed firm.
The holder of the receipts receives a proportionate beneficial interest in the underlying security. The underlying share to IFSC Receipt ratio, as specified by the NSE IFSC from time to time, is used to determine their issuance.
As a result, an NSE IFSC Receipt represents a portion of an underlying share, making participation more affordable for investors. For example, a US$ 2900 Amazon share can be converted into 200 IFSC receipts valued around US$ 15 each. The ratio is revised on a regular basis.
The NSE IFSC Receipts Custodian will pay any sum paid by the NSE IFSC Receipts Custodian in connection with the receipts in US dollars. One can buy NSE IFSC US Stock the same way they buy other Indian securities.
Corporate activities such as dividend and bonus issues would be open to all investors. Funds and NSE IFSC Receipts will be settled in a T+3 cycle, which means that depository receipts will be credited to the demat account three days following the trading date. After three days, funds from the sale of receipts will be credited.
Brokerage fees, exchange transaction fees, receipt issuance fees, and demat account fees some of the fees imposed on the investor. An investor can also request that NSE IFSC Receipts be converted into the underlying share. To receive delivery of the underlying shares in a US brokerage account, the investor must submit a cancellation request.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.