SEBI removes CP Code Requirement for NRIs Trading in Derivatives to Boost Ease of Investment [Read Circular]

This decision is aimed at improving operational efficiency and boosting the ease of doing investment for NRIs who wish to participate in India’s derivatives market.

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What Was the Earlier Requirement?

As per an earlier SEBI circular issued in 2003, NRIs who wanted to trade in derivative contracts were required to:

• Notify the name(s) of their clearing member(s) to the stock exchange.
• Be assigned a CP code by the exchange.
• This code was used to track and monitor the position limits of each NRI investor separately.

What Has Changed Now?

Under the new circular:

• NRIs are no longer required to inform the exchange about their clearing members.
• CP code assignment is no longer mandatory.
• SEBI has instructed exchanges and clearing corporations to monitor the positions of NRIs in the same way as any regular (resident) client.
• The position limits for NRIs will now be the same as the client-level position limits prescribed by SEBI from time to time.

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What Exchanges and Brokers Must Do

SEBI has directed all recognized stock exchanges and clearing corporations to:

1. Inform their members about this change and publish the circular on their websites.
2. Update their bye-laws, rules, and procedures to reflect the new system.
3. Issue new operational guidelines within 30 days from the date of this circular.
4. Allow existing NRI clients to opt out of the CP code framework by simply sending an email request within 90 days.
5. Provide future flexibility for NRIs who may opt for CP codes initially but wish to exit later on by email.

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