Yes, it is legal for Indian residents to invest in US stocks, provided they comply with certain regulations and guidelines. Here’s a detailed overview:
1. Liberalised Remittance Scheme (LRS):
o RBI Guidelines: Under the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme (LRS), Indian residents can remit up to USD $250,000 per financial year abroad without needing prior approval from the RBI. This scheme facilitates various purposes, including investments in international markets.
o Investment in US Stocks: Indian investors can use the LRS to invest in US stocks, provided they remain within the annual remittance limit and adhere to the regulations specified by the RBI. For detailed guidelines, refer to the RBI’s website and review Article 6(iii) for regulations on equity investments.
2. Regulatory Compliance:
o SEC Registration: Ensure that the platform or broker through which you invest in US stocks is registered with the US Securities and Exchange Commission (SEC). This registration ensures that the broker complies with US financial regulations.
o Brokerage Firm: For instance, Vested Finance Inc. is registered with the SEC, and US stocks and ETFs are offered through VF Securities Inc., which is a member of FINRA and SIPC. For more information about these firms, you can visit BrokerCheck and SIPC.
By following these guidelines and using regulated brokerage services, Indian residents can legally invest in US stocks. For the most current regulations and updates, always refer to the official RBI website and consult with financial advisors if necessary.