Description

SEBI eliminates mandatory CP Code requirement for NRIs trading in exchange traded derivatives to improve operational efficiency and ease of investment.

Summary

SEBI has eliminated the mandatory requirement for Non-Resident Indians (NRIs) to notify clearing member names and obtain Custodial Participant (CP) Code assignments from exchanges for trading in exchange traded derivatives contracts. This change aims to improve operational efficiency and ease of doing investment for NRIs while maintaining the same position limit monitoring standards.

Key Points

  • Removes mandatory CP Code requirement for NRI derivative trading
  • Exchanges will monitor NRI position limits similar to regular client level position limits
  • NRI position limits remain same as client level position limits specified by SEBI
  • Existing NRI clients can opt out of CP Code within 90 days
  • Implementation based on Brokers’ Industry Standards Forum recommendation

Regulatory Changes

  • Elimination of mandatory notification requirement for NRIs to inform exchanges about clearing member names
  • Removal of compulsory CP Code assignment by exchanges to NRIs
  • Standardization of position limit monitoring process for NRIs with regular client monitoring procedures
  • Introduction of voluntary CP Code system with exit options

Compliance Requirements

  • Stock Exchanges/Clearing Corporations must notify members and publish on websites
  • Amendment of relevant Bye-laws, Rules, Regulations, Circulars, SOPs and FAQs required
  • Development of new operational guidelines within 30 days of circular issuance
  • Members must provide CP Code exit option to existing NRI clients within 90 days
  • Members must establish procedures for NRIs to exit CP Code system via email communication

Important Dates

  • Circular Date: July 29, 2025
  • Guidelines Development Deadline: 30 days from circular issuance (August 28, 2025)
  • NRI Client Exit Option Deadline: 90 days from circular issuance (October 27, 2025)

Impact Assessment

This circular will streamline NRI participation in derivative markets by reducing administrative burden and operational complexity. The standardization of monitoring processes will improve efficiency for exchanges and brokers while maintaining regulatory oversight. NRIs will benefit from simplified onboarding and trading processes, potentially increasing participation in Indian derivative markets. The change aligns with ease of doing business initiatives and may enhance India’s attractiveness as an investment destination for NRIs.

Impact Justification

Streamlines NRI derivative trading processes but affects only specific investor segment