Description

SEBI eliminates mandatory CP Code requirement for NRIs trading derivatives, simplifying operational processes and bringing ease of doing investment.

Summary

SEBI has eliminated the mandatory requirement for Non-Resident Indians (NRIs) to notify clearing member names and obtain Custodial Participant (CP) Codes when trading in exchange traded derivatives contracts. This change aims to improve operational efficiency and ease of doing investment for NRI clients.

Key Points

  • Mandatory CP Code assignment for NRIs in derivatives trading is abolished
  • NRI position limits will be monitored similar to regular client-level position limits
  • Position limits for NRIs remain same as client-level limits specified by SEBI
  • Existing NRI clients can opt out of CP Code within 90 days
  • Exchanges must implement operational changes within 30 days

Regulatory Changes

  • Removal of requirement under Para II of SEBI Circular SEBI/DNPD/Cir-17/2003/10/29 dated October 29, 2003
  • NRIs no longer need to notify clearing member names to exchanges
  • Exchanges will not assign unique CP Codes to NRIs
  • Position monitoring shifted to standard client-level monitoring framework

Compliance Requirements

  • Stock Exchanges/Clearing Corporations must notify members and update websites
  • Amendment of relevant Bye-laws, Rules, Regulations, Circulars, SOPs and FAQs required
  • New operational guidelines to be issued within 30 days
  • Members must provide exit option to existing NRI clients with CP Codes
  • Email-based request mechanism for CP Code exit to be implemented

Important Dates

  • Within 30 days: Exchanges to issue new operational guidelines
  • Within 90 days: Existing NRI clients can request CP Code exit via email
  • Ongoing: Option for NRIs to exit CP Code after initial adoption

Impact Assessment

This regulatory change will significantly simplify the derivatives trading process for NRI investors by removing bureaucratic requirements. The operational efficiency gains will benefit both NRI clients and market intermediaries by reducing compliance overhead. However, exchanges and clearing corporations will need to modify their monitoring systems to accommodate the new framework. The change aligns with broader regulatory efforts to enhance ease of doing business in Indian capital markets.

Impact Justification

Simplifies trading processes for NRIs but affects specific investor segment only