Heard of the famous FAANG stocks? The acronym for the Meta (a.k.a Facebook), Amazon, Apple, Netflix, and Alphabet (a.k.a Google). These are stocks of some of the most popular companies worldwide. Moreover, almost every average Indian netizen uses the services of these companies regularly. We expect the future growth aspects of these companies to be very good. These are stocks listed in the US stock markets. None of these stocks are listed in Indian stock markets at present. But is there any chance, you and I, sitting from India can invest in these US stocks? Definite there is. We have a handful of stockbroking companies/discount brokers offering such a feature. We also have mutual fund houses that let Indian investors invest in US-based stocks via Mutual Funds.
But what if the stock exchange itself lets you invest in US stocks from India? The National Stock Exchange (NSE) has started offering this service via GIFT City. The NSE IFSC is the wholly-owned subsidiary of the NSE in association with the GIFT City – International Financial Services Centre (IFSC) located in Ahmedabad. The NSE IFSC is offering Indian investors the facility to invest in select US stocks from March 3rd, 2022.
We will see the details of how to invest in US stocks via the NSE IFSC? What is the minimum quantity required for such investments? What are the charges for investing in US Stocks through NSE IFSC? Read on.
Just before going ahead, we want to make it clear that investing in US Stocks through NSE IFSC is currently under the regulatory sandbox. This means that the service is open to a limited number of customers initially. The number of US stocks selected under the program is currently eight. This number is likely to go up to fifty in near future.
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The Process
The process of owning US stocks via NSE IFSC is pretty straightforward. You need to open a trading and Demat account with any of the 36 NSE IFSC registered brokers. Then transfer funds from the local bank to the NSE IFSC’s registered broker’s bank account. You are ready to trade/invest once the funds reflect in the broker’s bank account.
Timings & Settlement
The trading in US Stocks via NSE IFSC starts at 8 pm and continues till 2:30 am the next day. The trading, clearing, and settlement follow the rules of the IFSC. US stocks follow the T+3 settlement model whereas Indian stock exchanges follow the T+2 settlement cycle. This means the stocks you purchase through NSE IFSC come to your Demat account on the 3rd day after the transaction.
The stocks will be in the form of Unsponsored Depository Receipts (DRs). A company listed in one nation can attract investors from other countries through depository receipts. If such a company sponsors the DRs, we call them Sponsored DRs otherwise we call them the unsponsored DRs. For instance, the shares of Indian MNCs like Infosys, ICICI Bank, and Wipro are currently trading in the US stock markets through sponsored DRs.
Minimum Quantity To Buy
Since the stock prices of the US Stocks are in hundred of US dollars (if not in thousands), the investors from NSE IFSC can transact in multiples of $10, $20, etc. The stock exchange itself will collect charges to the tune of 12 cents per $100 of trade. This is apart from the charges that the brokerage firm imposes on these transactions.
Conclusion
If you are one of those investors who want to buy select US Stocks at your own will, based on the research you have done, then the NSE IFSC route is for you. However, for an average retail Indian investor investing in US stocks though the route of Mutual Funds makes more sense.