SEBI mulls simplifying NRI trading in exchange-traded derivatives

To simplify trading for Non-Resident Indians (NRIs) in exchange-traded derivatives and improve efficiency, Sebi on Tuesday proposed using PAN to monitor position limits, removing the need to notify Clearing Members or obtain CP Codes.

Currently, NRIs trading in derivatives are required to obtain a Custodial Participant (CP) Code through a Clearing Member (CM). They can only trade through one CM at a time, and switching requires a No Objection Certificate (NOC). This process creates inefficiencies.

With PAN now used as a unique identifier in the securities market, it can replace the CP Code for monitoring NRI position limits.

In its consultation paper, Sebi has proposed removing the requirement for CP Codes and the need to stick to a single CM.

“In order to bring ease of investment for NRIs to trade in derivatives and simplify procedure of monitoring NRI position limits, it is proposed to issue circular on ‘operational efficiency in monitoring of NRI position limits in Exchange Traded Derivatives Contracts – ease of doing investment’ to remove the requirement for NRIs to have a CP Code and deal with only one CM,” Sebi said.

Also, it suggested using PAN to monitor NRI position limits, similar to how client-level positions are monitored.

These measures, if implemented, will simplify the trading process for NRIs and enhance operational efficiency.

The Securities and Exchange Board of India (Sebi) has sought public comments on the proposal till December 31.