Trading US markets from india

[shemz]

Global futures. Do remember to negotiate hard with them. I was paying some $3.7 round turn for trading ES emini on Globex, Ninjatrader license and CQG datafeed. Also do good research on the clearing firm they offer you. I used Rosenthal Collins Group for CME. Mirus futures is the brokerage arm of RCG, and so is also extremely reliable in execution but a bit more expensive in commissions than Global. Interactive Brokers are very good as well, with low rates and a low level API. Another one worth a mention is OpenECry with a very good platform and a powerful API. Global can negotiate a good deal with OEC too.

However, the important question of course is how would you go about margin trading overseas with the regulatory hurdles in place. On a public forum I can only give a pointer for regulatory arbitrage over this matter, search on the internet for offshore ibc. This is the most common route for traders and trading firms around the world to work around tough regulations.

 

[ubertrader]

Hi Trade2411,
Found this in the following link of RBI http://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=7350#A13

Am reproducing the particular para ...
A.13 Liberalised Remittance Scheme of USD 200,000 for Resident Individuals
13.4 Remittances under the Scheme are allowed only in respect of permissible current or capital account transactions or a combination of both. All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges / overseas counterparty are not allowed under the Scheme.

From the above it appears that we cannot trade in derivatives in a foreign exchange. The rules are applicable to an Indian resident and it does not apply to the foreign brokerage. They are not resident here. It is we who would have broken the law.. .

 

[trade2411]

Hi Trade2411,
Found this in the following link of RBI http://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=7350#A13

Am reproducing the particular para ...
A.13 Liberalised Remittance Scheme of USD 200,000 for Resident Individuals
13.4 Remittances under the Scheme are allowed only in respect of permissible current or capital account transactions or a combination of both. All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges / overseas counterparty are not allowed under the Scheme.

From the above it appears that we cannot trade in derivatives in a foreign exchange. The rules are applicable to an Indian resident and it does not apply to the foreign brokerage. They are not resident here. It is we who would have broken the law.. .

Under the section , Permissible capital account transactions, I read this in the RBI site. Pls see last point.
Classes of capital account transactions of Persons resident in India


a)Investment by a person resident in India in foreign securities

b)Foreign currency loans raised in India and abroad by a person resident in India

c)Transfer of immovable property outside India by a person resident in India

d)Guarantees issued by a person resident in India in favour of a person resident outside India

e)Export, import and holding of currency/currency notes

f)Loans and overdrafts (borrowings) by a person resident in India from a person resident outside India


g)Maintenance of foreign currency accounts in India and outside India by a person resident in India

h)Taking out of insurance policy by a person resident in India from an insurance company outside India

i)Loans and overdrafts by a person resident in India to a person resident outside India

j)Remittance outside India of capital assets of a person resident in India

k)Sale and purchase of foreign exchange derivatives in India and abroad and commodity derivatives abroad by a person resident in India.

 

[ubertrader]

Oh well... then what is correct .

 

[shemz]

Well it probably means .. you can trade derivatives, but not on margin! So pay full price of a contract and earn peanut size RoI.
trade2411, point g is interesting. Open an account abroad and transfer first to that account using clause g above. And then do whatever you want to do.

 

[trade2411]

Well it probably means .. you can trade derivatives, but not on margin! So pay full price of a contract and earn peanut size RoI.
trade2411, point g is interesting. Open an account abroad and transfer first to that account using clause g above. And then do whatever you want to do.

I will take it as we can trade derivatives abroad, Those whoever wrote the rules would definitely be aware of margin required for derivatives . Moreover, when it is clearly written one can derivatives, i dont want to take fuss about something unclear. Shemz, Hows your experience been trading abroad as you said you traded with global futures.

 

[DanPickUp]

You have day margins and you have over night margins in case you have a naked position going on for over 24 hours.

Your margins are calculated by what you do. If you trade a naked position, your margins are higher compare to when you trade for example a future spread, as in the States the hedge is taken in to account (Not like in your country where NSE is not able to do that). Same applies with any option strategy. And that is great as when done the right way, you even can trade without any margins. But that is an other topic and needs strategy knowledge.

Depending on the volatility in the market, the exchange like CME or NYS will ask for higher margins if needed (Crash or special events in the market and then the vola rises immensely). Be aware about that fact.

 

[nac]

you even can trade without any margins. But that is an other topic and needs strategy knowledge.

Heard it two years ago, didn't remember who said that AW10 or you...

I am hearing it again...

 

[DanPickUp]

Heard it two years ago, didn't remember who said that AW10 or you...

I am hearing it again...

You want to hear it again:

And that is great as when done the right way, you even can trade without any margins

Now it is the third time.

You may once try to trade with a broker from the States and next time you may will be able to post it, as you may know how to do it and then believe it.

 

[shemz]

I will take it as we can trade derivatives abroad, Those whoever wrote the rules would definitely be aware of margin required for derivatives . Moreover, when it is clearly written one can derivatives, i dont want to take fuss about something unclear. Shemz, Hows your experience been trading abroad as you said you traded with global futures.

There is no fuss really, unless one wants it, in which case the crowd will dance the tunes of bandwagon effect. Jokes aside, I think nobody will question you as long as you don't keep losing money.

I was an expat back then and traded index and debt derivatives on CME and Liffe. I still do, but my focus currently is on an expected rise in vol and India VIX. I was in Germany for a summer few years back, when I realized the effect of distance in trading. The problem is that the US markets are relatively more efficient (well in relation to NSE), which means that easier opportunities do not last for too long. So while I knew a Russian who successfully scalped ES in anticipation of a volatile move, I often faced slippage trading from Germany as I waited for a confirmation from T&S. But if you are a strategic trader and know exactly what you are doing, the latency effect can be mitigated.

Other than that, the commissions and margins are much lower than in India. As Dan mentioned, use the day margins to maintain intraday positions. Other advantage is the accessibility of information, with several live squawk services and data vendors offering reliable data on virtually every instrument for much cheaper prices than here. If you are an algo trader, US markets are much easier to set up things.