Great News for NRIs: SEBI Simplifies Derivatives Trading with PAN

Exciting news if you are an NRI trading in Indian derivatives markets—You do not require a Custodial Participant (CP) code anymore! Yes, SEBI has moved to simplify the process to make it easy and convenient for you to access India’s markets. Let’s dive into what this means and why it’s such a big deal.

What’s changing?

Bye-bye CP Code: Until now, NRIs needed a CP code assigned by the exchange to trade in exchange-traded derivatives through their NRO accounts. This added an extra layer of complexity. Well, not anymore! SEBI has scrapped this requirement.

Say hello to PAN: Rather than CP code, use your PAN (Permanent Account Number) as the same unique identity for all trading. Easy, right?

More Flexibility: Want to clear trades through different clearing members? You’re free to do that now. The CP code used to tie you to a specific clearing member, but that restriction is gone.

Why the change?

This move is part of SEBI’s efforts to make investing in India’s financial markets more accessible and hassle-free for NRIs. It’s also in line with feedback from industry players and stakeholders who felt that the CP code system was outdated and unnecessary.

By simplifying these processes, SEBI is not just making things easier for NRIs—it’s also improving operational efficiency for exchanges and clearing corporations.

What does this mean for NRIs?

Here’s why this is great news for you:

Less Red Tape: No more back-and-forth to get a CP code. Your PAN is all you need.

More Freedom: You can now clear your trades through multiple clearing members. That’s flexibility you didn’t previously have.

Smoother Compliance: Position limits for NRIs will continue to be monitored, but this is now by the clearing corporation directly. You don’t have to manage this process on your own.

Important feature of the circular:

Simplified Position Monitoring: Clearing corporations will now monitor NRI position limits directly, just like they do for other clients. The position limits remain the same as before.

Timeline for changes:

New NRI clients won’t need a CP code starting 30 days after this circular is issued. Existing CP codes will be phased out within a year or until all current positions are closed, whichever comes first.

Amendments to Rules: Exchanges and clearing corporations will update their rules, FAQs, and procedures to reflect these changes and ensure everyone is informed.

Why This Matters The whole process of trading derivatives becomes simpler and quicker. By eliminating unnecessary procedures, SEBI is making it easier for you to focus on what truly matters—your investments.

What’s Next? Stock exchanges and clearing corporations have already been asked to implement these changes and keep everyone updated on their websites. As an investor, you’ll start seeing these changes in action soon.

In short, SEBI’s decision to do away with CP codes is a great help for NRIs. It’s one less thing to worry about, giving you more time and flexibility to manage your investments. Trading in Indian derivatives markets just got a whole lot easier!

Source: Google, SEBI Circular

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI-prescribed Combined Risk Disclosure Document before investing. Brokerage will not exceed SEBI’s prescribed limit.