Help Rquired! Investing in Nasdaq/NYSE

[donish]

Hi All,

I opened an account in Interactive broker to ivest in NYSE.
They need 5000.00 USD to open an account. The broker has given an american account/bank to transfer the money and start trading the a/c.

My indian bank is HDFC and they told me that I cannot transfer money from INR to USD to any international bank A/c as per the RBI rules.
Please anyone confirm this if this is true?

Thanks,
donish

 

[throwawayacc123]

Hi All,

I opened an account in Interactive broker to ivest in NYSE.
They need 5000.00 USD to open an account. The broker has given an american account/bank to transfer the money and start trading the a/c.

My indian bank is HDFC and they told me that I cannot transfer money from INR to USD to any international bank A/c as per the RBI rules.
Please anyone confirm this if this is true?

Thanks,
donish

Yes this is true.

IB is trying to fool indian customers.

It is illegal to trade overseas on margin. you can only trade in NSE/MCX with IB.

 

[donish]

PLease can send some links on the RBI? When did this rule take into effect.....looks like all the major broker did have this facitlity.....are there any other brokers whi are doing it.....so there are no body who has invested in NYSE or Nasdaq yet?

 

[throwawayacc123]

PLease can send some links on the RBI? When did this rule take into effect.....looks like all the major broker did have this facitlity.....are there any other brokers whi are doing it.....so there are no body who has invested in NYSE or Nasdaq yet?

I will make it easier for you..since i m getting bored today..

FROM RBI Site

==========================
To

All Category-I Authorised Dealer Banks

Madam / Sir,

Liberalised Remittance Scheme for Resident Individuals- Reduction of limit from USD 200,000 to USD 75,000

Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to the guidelines regarding the Liberalised Remittance Scheme (LRS) for Resident Individuals (the Scheme).

2. On a review of the scheme, it has now been decided to reduce the existing limit of USD 200,000 per financial year to USD 75,000 per financial year (April - March) with immediate effect. Accordingly, AD Category – I banks may now allow remittance up to USD 75,000 per financial year, under the scheme, for any permitted current or capital account transaction or a combination of both. Further, the following changes / clarifications in regard to the remittances under LRS will come into effect immediately :

(i). The scheme should no longer be used for acquisition of immovable property, directly or indirectly, outside India. Therefore, AD Category-I banks may henceforth not allow any remittances under the LRS Scheme for acquisition of immovable property outside India.

(ii). The scheme should not be used for making remittances for any prohibited or illegal activities such as margin trading, lottery etc., as hitherto.

(iii). Resident individuals have now been allowed to set up Joint Ventures (JV) / Wholly Owned Subsidiaries (WOS) outside India for bonafide business activities outside India within the limit of USD 75,000 with effect from August 5, 2013 and subject to the terms and conditions stipulated in Notification No.FEMA 263/RB-2013 dated August 5, 2013.

3. Further, the limit for gift in Rupees by Resident Individuals to NRI close relatives and loans in Rupees by resident individuals to NRI close relatives in terms of A.P. (DIR Series) Circular No.17 and 18 both dated September 16, 2011 shall accordingly stand modified to USD 75,000 per financial year.

4. All other terms and conditions mentioned in A. P. (DIR Series) Circular No. 64 dated February 4, 2004, A. P. (DIR Series) Circular No. 24 dated December 20, 2006, A. P. (DIR Series) Circular No. 51 dated May 8, 2007, A.P. (DIR Series) Circular No.36 dated April 4, 2008, A.P. (DIR Series) Circular No.17 and 18 both dated September 16, 2011 and A.P.(DIR Series) Circular No. 106 dated May 23, 2013 shall remain unchanged.

5. Necessary amendments to the Notification No. FEMA.1/2000-RB dated May 3, 2000, [Foreign Exchange Management (Permissible Capital Account Transactions) Regulations 2000] are being notified separately.

6. AD - Category I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

7. The directions contained in this Circular have been issued under Section 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(C.D. Srinivasan)
Chief General Manager

==============================================

more info @ http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8306&Mode=0

 

[donish]

Please read this below...

http://www.ahaliamoneyexchange.com/liberalised-remittances-scheme.html

 

[aryabhatta]

Hi All,

I opened an account in Interactive broker to ivest in NYSE.
They need 5000.00 USD to open an account. The broker has given an american account/bank to transfer the money and start trading the a/c.

My indian bank is HDFC and they told me that I cannot transfer money from INR to USD to any international bank A/c as per the RBI rules.
Please anyone confirm this if this is true?

Thanks,
donish

There is nothing illegal in this, if you check IB will open your account classified as a "cash account" not as a "margin account" go ahead and tell your bank that you want to invest in NYSE exchange, they probably think you want to trade on margin, which is not permitted.

 

[throwawayacc123]

There is nothing illegal in this, if you check IB will open your account classified as a "cash account" not as a "margin account" go ahead and tell your bank.

Which means he will not get leverage and he will have to buy and hold shares. As good as investing.

Investing is legal. you can do that will Indian brokers as well. No hassle of doing wire transfers.

 

[donish]

Here is the link which says we can invest....

http://www.rbi.org.in/scripts/FAQView.aspx?Id=66

 

[aryabhatta]

Which means he will not get leverage and he will have to buy and hold shares. As good as investing.

Investing is legal. you can do that will Indian brokers as well. No hassle of doing wire transfers.

Again it depends if he opens a stocks and warrant account or a futures accounts both have R T-Margin, R T-Margin IRA, Cash, Portfolio Margin.
IB will open in the cash segment. IB have a strange account classification.

He can still trade on margin but this will be illegal & IB have covered themselves because the account is classified under the cash section.

If the customer invests in equities then there is nothing illegal, but if he trades on margin then it is illegal, but either way IB is not doing anything illegal.

Did you read what he said in the first post? First read what he says .... don't jump to conclusions.

Hi All,

I opened an account in Interactive broker to ivest in NYSE.

He wants to invest in NYSE

Just because investing through an Indian broker is less hassle doesn't necessarily mean its a better option.

We don't know what his priorities are so saying this is better or that is better is basically of not much use.

He may be considering costs involved, he has not clarified what his priorities are. If its ease of investing then yes you are correct but if its lowest transaction costs then you maybe wrong. It depends

 

[throwawayacc123]

Again it depends if he opens a stocks and warrant account or a futures accounts both have R T-Margin, R T-Margin IRA, Cash, Portfolio Margin.
IB will open in the cash segment. IB have a strange account classification.

He can still trade on margin but this will be illegal & IB have covered themselves because the account is classified under the cash section.

If the customer invests in equities then there is nothing illegal, but if he trades on margin then it is illegal, but either way IB is not doing anything illegal.

Did you read what he said in the first post? First read what he says .... don't jump to conclusions.



He wants to invest in NYSE

Just because investing through an Indian broker is less hassle doesn't necessarily mean its a better option.

We don't know what his priorities are so saying this is better or that is better is basically of not much use.

He may be considering costs involved, he has not clarified what his priorities are. If its ease of investing then yes you are correct but if its lowest transaction costs then you maybe wrong. It depends

Like you said he can still trade on margin with cash a/c.

Now IB being in India knows very well Indians cannot trade on margin and yet they allow it.

How is this legal?

Indian brokers also allow you to invest in US stocks but they make it very clear that you cannot trade on margin and they don't give you margin. But IB does not make it clear and they are putting customers are risk. If you ask IB regarding this , they say it is up to you to take the risk. They just want their brokerage.