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Anybody know ETA when foreign individual investors (besides NRIs) will be able to trade Indian stocks (besides ADRs)?

I hate sitting on the sidelines only buying ADRs and closed-end funds and missing tech run-up!

Thanks!
Dave
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Hi all

I am so sorry that I found this board so late. I have been a fool for nearly 2 years and have been trading in US stocks for more than a year now. I live in Qatar and am an NRI. I, like many other NRI's had my doubts about trading in the BSE and NSE. I feel that it is not as transparent as US trading. But now I see changes and would like to venture into the Indian stock trading. But before that I have a few doubts and would appreciate if anybody out there could clarify them for me.

1. What is ADRs.
2. Can I buy INFY, SIFY, IC.d through Datek.
3. What other Indian stocks are listed on the NYSE/NASDAQ
4. Is there any ebrokers in India through whom we can trade stock (like Datek etc.). What are their trade fee/commission? Have any of you done business with them and if yes, how reliable are they in placing your order etc.

I would appreciate any help in the above matters.

While I was reading the old messages I came across couple of messages asking about trading in US stocks from UAE. I live in Qatar which is very close to UAE. To trade in US stocks you have to open an account with one of the ebrokers in US like Datek, etrade etc. You will have to fill out their form (you can get these online from their respective sites) and send it together with the W8 form. If I remember correctly you need to deposit at least $3000 to start an account. Datek charges $9.99 for a trade of up to 500 stocks. I have my account with them and they are very reliable. So far I have no problems with their service. Do your own research please. Once you have your account they provide you with a password and you can begin trading. Hope this helped. I also do DRIPs. Fool.com has a section dediated for DRIPs. Read them and there are several boards for DRIPs too, which is very informative.

This is a great board. Keep it up you all. And happy trading and sorry for the long post.

H
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1. ADRs are American Depositary Receipts which represent a set number (or fraction) of shares of a foreign stock and they are traded on a U.S. exchange. There can be both sponsored and unsponsored ADRs also. For more information, I'd suggest you might want to look at:

J.P. Morgan's ADR website:
http://www.adr.com/

Bank of New York's ADR website:
http://www.bankofny.com/adr/

These have a wealth of information about ADRs.

Since you are outside the U.S., you may also be eligible to purchase GDRs (Global i/o American) and other instruments that U.S. individual investors cannot purchase. Both of the above sites also talk about these.

2. Yes, you should be able to purchase these ADRs through Datek as they are traded on US exchanges - although at least SIFY and INFY are incredibly volatile so step carefully.

3. I believe those are the only 3 currently traded on U.S. exchanges but again if you have a brokerage account outside U.S., you may be able to buy GDRs for other companies (e.g. - State Bank of India has a GDR but currently no ADR).

4. I do not believe that any brokers are currently authorized to trade online in Indian stocks although I understand this is to hopefully change shortly.
The only US broker I can remember hearing about is that TD Waterhouse has formed a JV with Tata Finance called Tata Finance TD Waterhouse Ltd for purposes of offering online trading to resident Indians and eventually to allow online trading to folks outside India (when this becomes allowed). I'm sure more will form JVs as approval nears though!
I also remember reading an article that talked about several local banks or brokerages in India are also planning on offering online trading such as ICICI WebTrade, a unit of ICICI (and again plans on offering services to resident Indians first and when approved offering to NRIs).

If anyone else out there has any idea of the timelines for:
1) Online trading to residents Indians
2) Trading open to foreign individual investors
I'd love to see a post.

Good luck to all!
Dave
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Also forgot to mention another way of playing Indian market from US exchange would be to purchase a Closed-End Fund such as:

The India Fund (IFN)
The India Growth Fund (IGF)
Jardine Fleming India Fund (JFI)
Morgan Stanley Dean Witter India Investment Fund (IIF)

These are like mutual funds but have a set number of shares and trade on NYSE usually at a discount to the underlying net asset value.

For more info on Closed-End Funds, you may want to visit:
http://www.herzfeld.com/
(It has links to IGF and IIF info also)

You can purchase these through Datek just like any stock.

There are also Open-End Mutual Funds which can be purchased at net asset value (I don't know if Datek offers mutual funds) but last time I looked they underwhelmed me.

Dave
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Dave,

Thank you for all the info. I am just a kindergarten student in this game. I never knew about the info you gave. Have lot of reading/research now. Will keep you all posted on the progress.

Good luck to all and fool on.
H
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Yes. I am in Dubai and trade using Datek. Only listed ADR at this moment are SIFY, INFY, Ic.d. More upcoming are ICICI Bank, Zee TV, Bharati Telecom.
Trading in India is becoming like Datek using online brokers and bank accounts. ICICI is already there and you can download their form from icicidirect. Plan is to start April. TD waterhouse is also planning with Tatas. However, there are 3 parts - the bank account, the demat depository and the broking service. ICICI combines all three - but you have to transfer funds from your account to the 'trade account. painful, but gettingthere. However, non-demat shares will still saty a problem. Hope this helps.
Regs
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You are absolutely correct in your readings of ADR, GDR adn the trading news. Currently, the cyber trading laws are not yet approved by the regulating body - SEBI. Trial trading is available with Geojit, ICICI and RR Finance. They need 3 accounts - a forex account, a demat account and a broking account. You can fill the forms for trading as a Foreign Individual or as a foreign body of persons. (OCB - overseas commercial body0. Permission has to be obtained from RBI (fed bank) to set up a Portfolio Management and you have to state a representative bank as your agent. All trades have to be thru this body only. Income and principal are repatriable after paying Indian taxes (10% capital gains).

I expect ICICI and TD Waterhouse to be operational by June.
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