‘Technology’ this word means a lot when we talk about international trade. Now technology has removed the international boundaries to make the whole world as a single market for investors across the world.
This has encouraged the Security and exchange board of India (SEBI) to allow Indian investors to invest beyond Indian boundaries. In the year 2011-12, SEBI has announced that the Indian investors can now trade in 24 major global indices. Although this has offered a new platform to Indian investors but as per SEBI Indian investors are allowed to trade in derivatives of global indices for a set period of time only. Lets have a look, is this going to be beneficial for the investors and how one can invest in such indices.
Key Features Of Trading Under Global Indices Derivatives By Indian Investors
- This will offer new platform to the investors to invest under international securities.
- This will help individuals to get international exposure with diversity in their portfolio .
- Trade will take place under the guidelines of SEBI which will ensure security.
- Trade will take place in Indian market hours in Indian currency to avoid currency conversion risk.
- Trading will be done the same way as trading in Indian market (like NIFTY) to offer comfort to the investor.
What Is The Eligibility Criteria For An Indian To Invest Under Global Indices Derivatives?
- Must be an Indian Resident
- Must have an overseas trading account
What Is The Maximum Limit Of Investment Allowed To An Indian Resident Under Global Derivatives?
Reserve Bank Of India (RBI), have allowed Indian resident to invest overseas upto $2 lakhs every financial year. In other words, the amount of investment made by an Indian investor is subject to a limit of 2 lakh dollars. Whereas no limit has been imposed on the number of transactions.
What Are The Different Investment Options Are Available To An Indian Investor To Invest Overseas?
An Indian investor is allowed to invest under immovable property, shares or fixed-income instruments outside India without RBI’s prior approval. You can also invest in mutual fund units and exchange-traded funds.
Is There Any Restriction On The Type Of Investment Made By An Indian Investor Overseas?
An Indian investor is not allowed to invest under foreign currency convertible bonds issued by Indian companies and foreign exchange trading. The regulation does not allow margin trades; you can buy securities only if there is enough money in your trading account. So you can’t trade in futures and options or short sell a security.
Is Overseas Investment By Indian Investors Are Allowed In All The Foreign Countries?
No, overseas investment by Indian investors are restricted in Bhutan, Nepal, Mauritius and Pakistan.
How Can An Indian Investor Start Investing Under Global Indices Derivatives?
New investors need to open an overseas trading account by submitting following documents will a duly filled account opening form :-
Proof of Identity / Residence:
- Copy of valid passport (as a proof of identity and residence), or
- Copy of valid driving license (as a proof of identity and residence), or
- Copy of PAN card (as a proof of your identity) and banker’s letter (as a proof of your residence)
Security and exchange board of India (SEBI) has offered a new platform to Indian investors to invest beyond domestic boundaries. If you have good knowledge of trading then it is a great opportunity to en cash your knowledge using this opportunity.
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