Description

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

Summary

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

Key Points

  • Removes mandatory notification of clearing member names by NRIs to exchanges
  • Eliminates requirement for exchanges to assign unique CP codes to NRIs
  • 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 system within 90 days

Regulatory Changes

  • Discontinuation of Para II requirements from SEBI Circular SEBI/DNPD/Cir-17/2003/10/29 dated October 29, 2003
  • New monitoring framework for NRI position limits aligned with regular client monitoring
  • Operational flexibility for NRIs to exit or opt for CP code system based on preference

Compliance Requirements

  • Exchanges/Clearing Corporations must notify members and publish on websites
  • Amend relevant bye-laws, rules, regulations, circulars, SOPs and FAQs
  • Develop operational guidelines within 30 days from circular issuance
  • Provide exit option to existing NRI clients with CP codes within 90 days
  • Enable operational changes for NRIs to switch between CP code and non-CP code systems

Important Dates

  • July 30, 2025: Circular issuance date
  • August 29, 2025: Deadline for exchanges to issue operational guidelines (30 days)
  • October 28, 2025: Deadline for existing NRI clients to exit CP code system (90 days)

Impact Assessment

This change simplifies the derivatives trading process for NRIs by removing bureaucratic requirements while maintaining regulatory oversight through existing client-level monitoring systems. The impact is positive for NRI participation in Indian derivatives markets, potentially increasing accessibility and reducing operational complexity for brokers handling NRI accounts.

Impact Justification

Streamlines NRI derivatives trading processes but affects specific investor segment only