I don't think this is an IB issue. There are numerous investment vehicles for NRI's and indian citizens who reside abroad that are compliant with India's own regulations. NRI's do not have to be indian citizens; for example - Indian's who have immigrated to Canada or Kenya or any other country and become citizens or green card holders in that new country qualify for NRI status. Your mileage may vary.
I stand corrected. Looks like Persons of Indian Origin (PIO) can trade too http://ibkb.interactivebrokers.com/node/848 Looks like its only for Indian Passport or origin. I dont think IB has a choice in this.
I see their logic. Only NRIs are allowed because they might have the use for rupee holdings later on. But an American citizen say like John McCain would not have any use for Indian rupees. So when Indian government does not allow the reexchange of Rupees into USD then the investor is stuck with Indian Rupees and cannot bring the investment back to US in the form of USD. In that scenario it is best for US investor to take part in the Indian ADRs that trade on NYSE etc. and participate in Indian markets that way. I wonder if Instituitional investors are allowed to exchange their Rupee holdings and profits and bring them back to US in the form of USD.
Oh, I see. The IB offer was extended to NRI , not a random non-Indian. I did not know the exact meaning of NRI before. Thanks for all the info above.
NRI = Non Resident Indians Also known in India as: Not Really Indians or Non Reliable Indians (.....)
I believe the exchanges (NSE, BSE) and hence IB are constrained by the rules set by the SEBI (Securities and Exchange Board of India), which is basically the governmental organization (read "mental organization") that can shoot enough red tape to trap even Superman if he ever dared try to manipulate Indian markets. In short, SEBI is paranoid about market manipulation. Ironically, their own actions, such as suddenly changing rules regarding P-Notes, causes market volatility to the tune of 15% a day. They are losing huge amounts of income by disallowing foreign retail traders.
Actually IB seems to be working towards an early mover advantage in Indian Markets. Indian Authorities would like to phase out the P-notes and had too, but the recession forced them to re-open the route. Investors using P-Notes through Foreign Institutional Investors are a big force in India. Problem is beneficiary owners of P-Notes issued by FIIs are not known. It is well known in Trading Circles that Govt would like to get investment more friendly to Anti-Money Laundering Laws, i.e. disclosed investors/traders, complying with KYC (know your customer) norms with the Indian broker. NRIs were always allowed to invest in the Indian market. As were FIIs, assumption they would be complying with Money Laundering Laws in their country. First steps towards liberalization was banning the P-Notes, second was DMA access/STP, third allowing foreign brokerages and fourth was allowing PIOs (persons of Indian origin, not citizens resident or non-resident, but those whose ancestors were Indian citizens) to invest in Indian markets directly. Further liberalizations were just around the corner, when recession stuck. P-Notes ban has since been withdrawn due to recession & falling markets. All news laws opening up India in the financial sector, were put on hold, probably fearing the financial sector contamination into the relatively isolated Indian markets. As of now, foreign persons and companies are not allowed to participate in the Indian Market. Foreign Institutional Investors are allowed, with repatriation of investment & profits (though capital gains are leviable), but registration process is a big headache and not suitable for average person. Debate is mainly about screening the investor so as to avoid Indian markets becoming money laundering hub. As is, it is quite an open secret that P-Notes may be harboring some wrong money. Further opening up should be quite soon and IB seems to be in a unique position, as it will have firsthand Indian Market experience, compared to others that will come in later. Sanjay.
commissions are not atall competitive for Intraday and F&O. actually more than twice what local brokers charging. worse IB has a minimum brokerage criteria of 100 INR which makes life more harder for small guys. but what stands out is the platform. the platforms provided by Indian brokers sucks.
Well, they are testing the market. It has always been that way in India, whatever market is opened up. It has happened in Telecom and the same will happen in Financial Industry. It will all be high prices until they realize the numbers they can get on the bottom of the pyramid. Then competition will sort it all out. India is now the biggest revenue source for vodafone despite the fact that India is also where the call costs are cheapest. Hell, that's an understatement if I ever saw one. These foreign brokers are going to set new bars and everybody is going to be following Despite being a huge market and a software development hub, we were getting shoddy software as the Software Companies & the Brokers knew we had no alternatives. Slowly, guys with better software are going to get big players, even if with negotiated prices, which are not offered to average retail customer...competition is coming and its going to be real good for the market. FYI, IB does have a slab type pricing, available from their marketing, if you are a volume player and can offer a given monthly turnover. Sanjay.