Indian retail investors can trade in select US stocks via NSE-IFSC platform

NSE IFSC, a wholly-owned subsidiary of the National Stock Exchange of India, on Thursday said it has launched trading in unsponsored depositary receipts, which will offer Indian retail investors an opportunity to invest in the US stocks listed on bourses like NYSE and NASDAQ in an easy and affordable way.

The trading in unsponsored depositary receipts -- NSE IFSC Receipts -- has been launched in association with HDFC Bank, under the regulatory sandbox framework prescribed by the IFSCA, according to a statement.

Following this launch, Indian retail investors will be able to transact on the NSE IFSC platform under the liberalised remittance scheme (LRS) prescribed by the Reserve Bank of India (RBI).

NSE IFSC Receipts are an innovative first-of-its-kind product offering to Indian retail investors, by providing them with an opportunity to diversify their investment in top-performing companies of global economies.

These receipts will make the entire process of investment in global stocks seamless and at a low cost. Investors will be provided with an option to trade in fractional quantity when compared to the underlying shares traded in global markets.

Starting with US stocks, NSE IFSC will soon widen its offering to other global markets, the statement noted.

HDFC Bank's IFSC Banking Unit in the GIFT City (HDFC Bank-IBU) in its role of NSE IFSC Receipts Custodian to this newly launched UDR programme will issue the NSE IFSC Receipts. The bank will undertake related activities besides opening the depositary accounts of investors as a depository participant registered with IFSCA registered depositaries.

Further, NSE IFSC Clearing Corporation Limited will offer its robust risk management framework, facilitate the clearing, and settlement of all trades in depositary receipts and provide the settlement guarantee with respect to all trades executed on the NSE IFSC platform.

Moreover, all the trades will also be covered under the investor protection framework at NSE IFSC. Investors will be able to hold the NSE IFSC Receipts in their own demat accounts opened in GIFT City and will be entitled to receive corporate action benefits pertaining to the underlying stock.

"Today's launch of trading in NSE IFSC Receipts is a good initiative to attract retail participation under the liberalised remittance scheme of the RBI and develop a vibrant capital market ecosystem in India's sole International Financial Services Centre (IFSC) at GIFT City," IFSCA Chairman Injeti Srinivas said.

According to him, this innovative offering from NSE IFSC enables retail resident investors to transact in select US stocks through the NSE IFSC platform initially under the regulatory sandbox framework and eventually as a regular product on the exchange for all international and domestic investors.

"With this launch, we have unlocked significant value to Indian retail investors and brokers, and we look forward to building on our position as an Integral and Innovative International IFSC exchange," NSE Managing Director and CEO Vikram Limaye said.

HDFC Bank Executive Director Kaizad Bharucha said the bank has been a pioneer and has been playing a catalytic role in transforming the Indian financial services space.

The NSE IFSC Receipts framework will also make these investments affordable and transparent, thereby paving way for retail participation, he added.