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.
What is an NSE IFSC Receipt?
  • 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.