Can Indians trade on NASDAQ?

The answer is Yes. Close on the heels of the RBI upping the annual limit for overseas remittances for individual investors to $200,000, ICICI Bank’s online trading arm, icicidirect.com, has opened the gates for Indians to invest in stocks of premier US companies that are listed on the NYSE, American Stock Exchange, and the NASDAQ.

They have partnered with Texas-based Penson Financial Services for this service, allowing investors to trade in US stocks, ADRs, ETFs, stock options and index options. There is a registration charge of Rs.999, and delivery charges are 0.75% or $9, whichever is higher.

Given the rate at which the rupee is appreciating, investors would certainly do well do complete their homework before sinking their money. Their rupees will be converted to dollars for purpose of remittance in order to trade, and should they sell, the dollars will be converted to rupees for credit to their bank accounts with ICICI Bank, which could lead to a loss at this rate. Another thing to remember is that in the US markets, the settlement period is T+3, as compared to Indian markets, where it is T+2.

Also came across an interesting statistic that this overall limit ($200,000) is sufficient to purchase 100 shares of each company listed on the Dow Jones(DJIA). At current closing prices, the acquisition cost works out to approximately $175,000 (almost around Rs.69 lakh), which of course would be out of the reach of the average Indian retail investor.

Food for thought, nevertheless… :-)