Here’s how to invest in US stocks through NSE IFSC

This has created a lot of buzz among investors who are looking for easy ways to get exposure to these stocks. While the stock exchanges in GIFT City were primarily set up for NRIs and foreigners to have easy access to Indian stocks and derivatives, it is a first product for onshore Indian investors.

In view of this, stock broking platform Zerodha has shared a blog which explains in detail how to invest in US stocks through NSE IFSC.

Important things to know about investing in US stocks through NSE IFSC

– Currently, investment in US stocks is in regulatory sandbox (testing), which means that NSE IFSC will be able to onboard only a certain number of clients. More customers will be allowed only after the IFSCA gets the final approval on the product.

– Trading remains open from 8 PM IST to 2.30 AM IST. Since some of these US stocks are priced between hundreds to thousands of dollars per share, trading in or owning shares in these companies is also permitted in multiples of $10 to $20.

– The entire trading, clearing, settlement and holding of US stocks will be under the regulatory structure of the IFSC Authority. The investment will be in the form of unsponsored depository receipts for Indian investors.

– Investors will be able to hold depository receipts in their demat accounts opened at GIFT City and will be entitled to avail corporate action benefits relating to the underlying stock.

– When a company listed on the exchanges in one country wants to attract investors and do business in another country, it is done through Depository Receipts (DR). If company offers DR, it is called Sponsored DR and if company does not indulge in it, then it is called Non-Sponsored DR. Indian companies like Infi, ICICI Bank, Wipro and others trade on US stock exchanges through sponsored DRs.

– One T+3 day settlement, which means the stocks or DRs once purchased will get credited to the demat account after 3 days (2 days in India). Similarly, the funds of the shares sold will get credited after 3 days. Unlike in India, no further transactions will be allowed till settlement.

The exchange itself will charge 12 cents for every $100, or 0.12%, in addition to what the brokerage firm that facilitates transactions on the NSE IFSC would charge the client.

Lastly, Zerodha is in the process of getting membership and said that it will go live in a few months after obtaining necessary approvals from Indian exchanges and SEBI.