Description

SEBI eliminates mandatory CP Code requirement for NRIs trading in exchange traded derivatives, allowing exchanges to monitor position limits similar to regular client limits.

Summary

SEBI has streamlined the monitoring process for Non-Resident Indian (NRI) position limits in exchange traded derivatives contracts by eliminating the mandatory requirement for NRIs to notify clearing members and obtain Custodial Participant (CP) Codes. Exchanges will now monitor NRI position limits similar to regular client position limits.

Key Points

  • Eliminates mandatory requirement for NRIs to notify names of Clearing Members for derivative trades
  • Removes requirement for Exchange assignment of unique Custodial Participant (CP) Code to NRIs
  • Exchanges/Clearing Corporations will monitor NRI position limits similar to client level position limits
  • NRI position limits remain same as client level position limits specified by SEBI
  • Existing NRI clients can opt to exit from CP code system within 90 days
  • Future flexibility provided for NRIs to exit CP code system after initial adoption

Regulatory Changes

  • Modification of Para II of SEBI Circular SEBI/DNPD/Cir-17/2003/10/29 dated October 29, 2003
  • Operational modalities for NRI position limit monitoring simplified
  • Monitoring methodology aligned with standard client position limit processes

Compliance Requirements

  • Stock Exchanges/Clearing Corporations must notify members and publish on websites
  • Amendments required to Bye-laws, Rules, Regulations, Circulars, SOPs and FAQs
  • New operational guidelines to be issued within 30 days of circular date
  • Members must provide exit option to existing NRI clients with CP codes
  • Email-based request system for CP code exit to be implemented

Important Dates

  • Circular issued: July 29, 2025
  • Guidelines implementation deadline: 30 days from circular date (August 28, 2025)
  • Existing NRI client CP code exit window: 90 days from circular date (October 27, 2025)

Impact Assessment

  • Positive impact on ease of doing business for NRI investors
  • Reduced operational complexity for exchanges and clearing corporations
  • Streamlined onboarding process for new NRI derivative traders
  • Maintained position limit monitoring effectiveness while improving efficiency
  • Enhanced flexibility for NRIs in choosing their operational framework

Impact Justification

Simplifies operational processes for NRI derivative trading but doesn't fundamentally change market structure