Operational Efficiency in Monitoring of Non-Resident Indians (NRIs) Position Limits in Exchange Traded Derivatives Contracts - Ease of Doing Investment

Description

SEBI eliminates mandatory CP code requirement for NRIs trading in exchange traded derivatives to improve operational efficiency and ease of 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 investment processes for NRIs while maintaining position limit monitoring.

Key Points

• Removal of mandatory CP code assignment for NRIs trading derivatives
• 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 out of CP code within 90 days
• Future flexibility for NRIs to exit CP code arrangement

Regulatory Changes

• Elimination of requirement for NRIs to notify clearing member names to exchanges
• Removal of mandatory CP code assignment by exchanges for NRI clients
• Simplified monitoring process aligned with standard client position limit procedures
• Updated operational framework for NRI derivatives trading

Compliance Requirements

• Stock Exchanges/Clearing Corporations must notify members and update websites
• Amendment of relevant Bye-laws, Rules, Regulations, Circulars, SOPs and FAQs required
• Development of new operational guidelines within 30 days
• Provision of CP code exit option for existing NRI clients within 90 days
• Implementation of flexible CP code exit mechanism for future requests

Important Dates

• August 28, 2025: Deadline for exchanges to issue new operational guidelines (30 days from circular date)
• October 27, 2025: Deadline for existing NRI clients to request CP code exit (90 days from circular date)
• Immediate: Circular effective date for new operational procedures

Impact Assessment

This circular significantly simplifies the derivatives trading process for NRIs by removing bureaucratic requirements while maintaining regulatory oversight. Exchanges and clearing corporations will need to update their systems and procedures to accommodate the new monitoring framework. The change is expected to increase NRI participation in derivatives markets by reducing operational complexities and improving ease of doing business.

Impact Justification

Simplifies NRI derivatives trading process but affects operational procedures for exchanges and clearing corporations