Indians can now trade in US Shares – UPSC Prelims

Till now, Indian investors buy US stocks through designated online brokers who have permission from Indian and US regulators to offer such services.

Now, investors in India have been allowed to trade in select US stocks through the NSE International Exchange (NSE IFSC).

This means domestic investors can purchase US stocks like Amazon, Alphabet, Tesla, etc.

However, the offering will be in the form of unsponsored depository receipts.

For example, one share of Tesla will be equivalent to 100 NSE IFSC receipts.

The International Financial Services Authority (IFSCA) has already given the approval for the plan.

It is a negotiable financial instrument in the nature of an unsponsored ‘depository receipt’, which means it is a derivative product and investors can directly trade in the stocks without having to do so through registered online brokers.

Just like shares are purchased domestically, shares can be bought in the US and issue receipts against them, which will be known as NSE IFSC Receipts.