Ask Morningstar: Can I trade in U.S. stocks on the new stock exchange?

By Larissa Fernand |  04-03-22 | 
 
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Larissa Fernand is an Investment Specialist. Follow her on Twitter @larissafernand

Can I have some basic information on the new exchange which allows retail investors to invest in the U.S.?

You are referring to the NSE IFSC Exchange that allows Indian retail investors to invest in U.S. stocks, listed on exchanges like NYSE and NASDAQ, in an easy and affordable way.

Here is some information that will help you. I have put it in a Q&A format for easier comprehension.

What is the NSE IFSC exchange?

It is a wholly-owned subsidiary of the NSE. This international exchange operates in GIFT.

What do the abbreviations means?

  • NSE: National Stock Exchange
  • IFSC: International Financial Service Centre
  • GIFT: Gujarat International Finance Tech City

Which stocks can be traded?

Initially, it only allows trading in 8 stocks.

  1. Alphabet
  2. Amazon
  3. Tesla
  4. Meta Platforms (Facebook)
  5. Microsoft
  6. Netflix
  7. Apple
  8. Walmart

Eventually, the list will go up to 50 and include names such as Nvidia, Intel, Nike, Adobe, Berkshire Hathaway, Mastercard, Visa, Chevron, Morgan Stanley, Paypal and JP Morgan.

Are the stocks listed in India?

No. These are not direct listings as market makers will buy these shares in the U.S. and issue receipts in India.

Trading is in India Unsponsored Depository Receipts (NSE IFSC Receipts). NSEIFSC Receipts will be offered by NSE IFSC exchange to Indian investors.

So does an investor own a share in the company?

NSE IFSC will release receipts in a certain ratio.

  • 1 share of Tesla = 100 NSE IFSC receipts
  • 1 share of Amazon = 200 IFSC receipts
  • 1 share of Alphabet = 200 IFSC receipts
  • 1 share of Meta Platforms = 50 IFSC receipts
  • 1 share of Microsoft = 50 IFSC receipts
  • 1 share of Netflix = 50 IFSC receipts
  • 1 share of Apple = 25 IFSC receipts
  • 1 share of Walmart = 25 IFSC receipts

Also, investors will get the benefit of investing in fractional shares. This will allow retail investors to invest smaller amounts by buying a fraction of the share. The tick size will be one cent, that is, $0.01. That means you will be able to bid for the receipts in the form of $6.62, $6.63, $6.64

What will be the currency in which transactions are done?

NSE IFSC Receipts will be traded in USD and permitted under the Liberalized Remittance Scheme (LRS), as per the limits prescribed by the Reserve Bank of India.

Do I have to register with the broker registered in the U.S.?

No. Investors need not route their investments through a broker registered in the U.S. to buy shares of the mentioned listed stocks.

However, investors would have to open trading and demat accounts with NSE IFSC registered brokers.

 Check out the NSE IFSC exchange here

Registered readers can post their queries by accessing the Ask Morningstar tab. Our team will answer SELECT queries relating to mutual funds, portfolio planning and personal finance. While we provide broad guidelines, we suggest you consult a financial adviser before making investment decisions.

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Articles authored by LARISSA FERNAND
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