Description

SEBI removes mandatory requirement for NRIs to notify clearing members and obtain CP codes for derivatives trading, simplifying operational processes.

Summary

SEBI has issued a circular to improve operational efficiency in monitoring Non-Resident Indians (NRI) position limits in exchange traded derivatives contracts. The regulator has eliminated the mandatory requirement for NRIs to notify clearing member names and obtain Custodial Participant (CP) codes from exchanges, streamlining the trading process for NRIs.

Key Points

  • Removal of mandatory CP code requirement for NRI derivatives trading
  • Exchanges will monitor NRI position limits similar to client-level position limits
  • NRI position limits remain same as client-level limits specified by SEBI
  • Existing NRI clients can exit CP code system within 90 days
  • Operational changes aimed at ease of doing investment for NRIs

Regulatory Changes

  • Discontinuation of mandatory notification of clearing member names by NRIs
  • Elimination of CP code assignment requirement by exchanges
  • New monitoring mechanism similar to regular client position limit monitoring
  • Flexibility for NRIs to opt out of CP code system

Compliance Requirements

  • Stock exchanges and clearing corporations must notify members and update websites
  • Amendments required to bye-laws, rules, regulations, circulars, SOPs and FAQs
  • Implementation guidelines to be issued within 30 days
  • Members must provide exit option to existing NRI clients with CP codes
  • Email-based request system for CP code exit process

Important Dates

  • Circular issued: July 29, 2025
  • Implementation guidelines deadline: 30 days from circular date
  • NRI client CP code exit window: 90 days from circular issuance

Impact Assessment

This circular significantly simplifies the derivatives trading process for NRIs by removing bureaucratic requirements while maintaining position limit monitoring. The change enhances operational efficiency for exchanges and reduces compliance burden for NRI investors, potentially increasing participation in derivatives markets. The 90-day transition period provides adequate time for existing clients to adapt to the new system.

Impact Justification

Simplifies NRI derivatives trading process but affects specific segment only