Description

SEBI removes mandatory CP Code requirement for NRIs trading in derivatives, allowing position monitoring similar to regular client limits for operational efficiency.

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 NRIs by allowing exchanges to monitor NRI position limits similar to regular client level position limits.

Key Points

  • Removal of mandatory CP Code assignment for NRIs trading derivatives
  • NRI position limits will be monitored similar to client level position limits
  • Position limits for NRIs remain the same as client level limits specified by SEBI
  • Existing NRI clients can opt out of CP Code within 90 days
  • Flexibility for NRIs to exit CP Code system later through email request

Regulatory Changes

  • Discontinuation of mandatory notification of clearing member names by NRIs
  • Elimination of CP Code assignment requirement by exchanges
  • Shift to client-level position monitoring methodology for NRIs
  • Updated operational processes for exchanges and clearing corporations

Compliance Requirements

  • Stock Exchanges/Clearing Corporations must notify members and update websites
  • Amendment of Bye-laws, Rules, Regulations, Circulars, SOPs and FAQs required
  • Development of new operational guidelines within 30 days
  • Members must provide exit option to existing NRI clients with CP Codes
  • Implementation of email-based request system for CP Code exit

Important Dates

  • July 29, 2025: Circular issued
  • Within 30 days: Exchanges must issue new operational guidelines
  • Within 90 days: Existing NRI clients can request CP Code exit

Impact Assessment

Positive Impacts:

  • Simplified trading process for NRIs in derivatives market
  • Reduced operational burden on exchanges and clearing corporations
  • Enhanced ease of doing business for foreign investors
  • Streamlined position monitoring processes

Operational Changes:

  • Exchanges need to modify existing monitoring systems
  • Brokers must update client onboarding processes for NRIs
  • Technology systems require updates to handle new monitoring methodology
  • Training required for staff handling NRI derivative accounts

Impact Justification

Simplifies derivatives trading process for NRIs but affects operational procedures for exchanges and brokers