How To Invest In US Stock Market From India?

What are US stacks, stocks, and ETFs?

In the United States, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite are the three most popular indexes. Apart from these indexes, there are approx 5000 stocks that constitute the US equity market. Being an Indian citizen now you can easily get exposure to international US market stocks and diversify your investment portfolio to further enhance your return possibility in long term.

Let’s me explain to you about top indexes briefly

Standard & Poor Index: S&P 500

It is one of the most popular US Indexes that comprises the stocks of 500 top companies curated on the basis of market cap, liquidity, public float, sector classification, financial viability, and trading history. S&P 500 index represents approximately 80% of the total value of the U.S. stock market and gives a good indication of total US stock market sentiment

The Dow Jones Industrial Average(DJIA):

DJIA is one of the oldest indexes in the world. It constitutes of the 30 largest and most influential companies in the U.S. It represents about a quarter of the value of the entire U.S. stock market, but unlike S&P 500, any percent change in the Dow should not be interpreted as an indication of overall US market sentiment.

The Nasdaq Composite Index:

Nasdaq is known to be heavy on tech stocks. It is a market-capitalization-weighted index of all the stocks traded on the Nasdaq stock exchange. This includes multiple subsectors across the tech market including software, biotech, semiconductors, and more. It also includes stocks from companies which is not from the U.S.

Any movement in the Nasdaq index indicates the performance of the technology industry as well as investors’ attitudes toward more speculative stocks.

Apart from these top indexes, there is one more popular index called The Wilshire 5000:

It is also known to be the “total stock market index” as it comprises of all the publicly traded companies that are headquartered in the United States and have readily available price data.

Created in 1974, this index represents the entire U.S. stock market and its movement aggregately.

Now that you are well aware of a few of the top US indexes, it is time to apprise of the magical concept of U.S stacks that we here at FinMapp are offering to help you better diversify your existing portfolio and harness more attractive returns

What Are Us Stacks?

It is a Pre-configured basket of stocks & ETFs that you can invest in with a single click in our app. These stacks are carefully crafted by top hedge funds, global asset management companies, experienced wealth management firms, and portfolio managers.

Some of the popular Stacks We are offering :

1. FAANGM:

Comprises of Top Internet, Media & Technology companies — Facebook, Amazon, Apple, Netflix, Google & Microsoft. These companies are consumer secular with strong businesses diversified across sectors such as Advertising, Fintech, Ecommerce, OTT, Cloud SaaS, Consumer Electronics, etc.

Given a CAGR return of 33.5 %

2. Global ETF Stack:

This Global ETF Stack comprises of Equity Index-only ETFs diversified among US Equity markets & Global Equity markets. The Stack offers broadly diversified exposure to the US and Global — European, BRICs, Emerging & Frontier Equity Markets.

Given a CAGR return of 11 % in 1 year.

3. US tech

The US Tech BlueChip Stack invests in pure Technology Internet companies that are critical to the industry and have leading competitive advantages (MOATs) in their businesses.

Given a CAGR return of 34.49 %

Why You Should Invest In US Stacks?

There are many reasons that one should factor in before investing in US stacks few of them are

1. Well-rounded portfolio diversification

It gives you a quick & hassle-free option to diversify your holdings in a single without doing a lot of stock research. These stacks are curated by popular hedge funds and fund managers that are market experts.

2. Managed By Experts:

These stacks are curated and crafted by investment experts based on extensive research & financial analysis, you get their expertise without paying a higher fee.

3. Automatic Rebalancing:

Based on market sentiments and volatility the auto- rebalancing of your stacks portfolio is done to ensure there is an alignment with your investment goals.

International Exchange Traded Funds(ETFs):

What Are ETFs?

If you are looking for the ease of stock trading and also the portfolio diversification power of mutual find ETF is the right product for you

The ETF definition is coined from these three components:

  • Exchanges: NSE/BSE
  • Trading: Selling and buying securities on stock exchanges
  • Funds: Pooled funds to be invested in a basket of stocks

ETF is a kind of passive mutual fund where securities are pooled in the form of a basket that tracks a stock index, commodities, sectors, or other asset classes. Unlike mutual funds, ETFs can be traded on stock exchanges like NYSE, NSE, etc. just like any other stocks.

In ETF the underlying investment funds are generally invested in stocks passively mirroring the composition of indices.

What Is International ETF:

An International ETF (Exchange Traded Fund) is an ETF that invests mainly in foreign-based securities. The focus can be regional, global, or on a specific country, and may hold equities or fixed-income securities. It tracks global markets or tracks a country-specific benchmark index.

With International ETFs, One can get exposure to stocks of multiple countries like US stocks. You will be able to trade in the international stock exchanges just like you do in the Indian stock market. For trading US ETFs, you will be required to create a US DEMAT account which you can easily create with our FinMapp app, you will be charged a small fee for the same.

How You Can Start Investing In US Stocks, US Stacks & International ETFs?

FinMapp has simplified US stocks and Stack investing to get you started quickly. These are the key steps you need to go through

Step 1: Download our App

By clicking the given links:

Step2. Sign-up in the app

By filling in the basic details

Step3: Go To Us Stacks option in the main dashboard

Step2. Select Us Stacks, Sign-Up & Complete e-KYC

You will be asked to sign-up and complete your e-KYC process to get the international Demat account.

e-KYC will require the following docs to be kept handy

  • PAN card
  • Aadhar Card

Once KYC is done, it will take a few minutes before it gets approved

This will not take more than 5–10 minutes.

Step3: Explore Stacks, Stocks and ETFs:

Once KYC is approved you can explore the available stacks and ETFs as shown below

Step4: Fund Your Bank Account :

If you want to buy any particular stacks or stocks you will have to ensure you have funded your wallet. You can do so by going to add fund option and transferring the funds from your registered bank account. Min amount recommended is $50.

Frequently Asked Questions:

How do US Stacks work?

US Stacks enables you to access international markets and diversify your portfolio globally. When you create an account on Stacks, your brokerage account is, in turn, automatically created with DriveWealth — our US partner for clearing and brokerage services. It will take 15–20 minutes for your account to get approved. Once approved, you will have to fund the account by transferring money into the brokerage account from your bank account.

Once the funds become available in your brokerage account, you will be able to make investments on Stacks. Feel free to use the extensive research and support available on the platform.

After selling any of your investments, you can click on “Withdraw” to transfer funds back into your account to get your money back. When you begin the withdrawal process, all your available cash will be sent over to your domestic bank account

Is there a minimum amount that I need to invest?

No. Unlike most traditional investing platforms, we place no restrictions on user accounts. There is no account minimum at Stacks. That said, in order to see the benefits of investing accrue to you, we recommend that you invest at least INR 7,000 or $100 to start off.

What are the documents required to create an account on the platform?

We require KYC documents to establish the identity of the user via picture ID and proof of address. You can either choose to upload your documents via your laptop or complete the process on your smartphone after scanning the QR code on the page.

Any one of the following documents for a combination of identity and proof of address is required:

From India

ID Proof:

  • Aadhar Card (front+back)
  • PAN Card (front+back)
  • Voters ID (front+back)
  • Passport (picture)
  • Proof of address:
  • Aadhar Card (front+back)
  • Voters ID (front+back)

Please note: Scanned copies and PDFs cannot be uploaded, please upload the photo of the document PNG/JPG format only.

How do I fund my account?

To add funds to your account, click on “Funds” from your Homepage and click on the “Add funds” button. Enter the amount you want to send to your brokerage account. You would be able to add your bank details for the first fund transfer which will be set as default for all future transfers.

Verify the information and refer to the following procedural details depending on your residential country:

From India: If you are an Indian Resident, you will be remitting money under RBI’s Liberalized Remittance Scheme (LRS). Currently, ICICI, IDFC, HDFC, Kotak and IndusInd Bank account holders can complete the LRS process online by signing into our platform and following the steps mentioned for fund transfer.

For HDFC and Yes Bank, you can select the offline option to download and print A2 form and schedule a pick-up for the documents via our delivery partners. For the other banks, please visit your nearest branch and speak to your relationship manager.

How do I withdraw my funds?

All you need to do is select the “Funds” button on your homepage page and then click on “Withdraw Funds”.

You will be shown how much money is available for you to withdraw. This is the “cash” in your account — either un-invested money or generated from sales of securities you, previously, owned. You can place a withdrawal request and the money will be wired to your domestic bank account. It takes 4–5 business days for the money to hit your account. You can only Withdraw funds to your default bank account which was added during fund transfer.

There is a $10 fee associated with withdrawals, charged by the US bank, and thus, the cash balance in your account should be at least $10 at the time of placing the withdrawal request. Any request above $20,000 requires an additional email approval.

Why was my fund transfer reversed?

The fund reversal will be initiated on the 7th day after the funds are debited from the user bank account in case of the below scenarios:

  • The name on the trading account does not match the name on the bank account from which funds were transferred
  • While initiating a transfer, in case, the 10-digit account number is not provided or has been entered incorrectly
  • On failure of providing Swift copy (Bank statement / Transaction receipt) to support team within 7 days

Note: In case of a reversal of funds, an additional third-party charge of $30 will be applied.

Where is my US investing account held?

Your investing (brokerage) account is opened at our US brokerage and clearing services partner DriveWealth LLC — a FINRA-regulated brokerage firm. It is a licensed carrying and self-clearing broker offering brokerage services to global investors. DriveWealth is backed by Softbank Group and other leading venture capital firms in the financial services ecosystem.

The custody of your account, in turn, would be held by DriveWealth. Reach out to the support team in case of further questions.

I forgot my password. How do I recover it?

If you have forgotten your password, please click on “Forgot Password” on the login page. You will get a reset code on your registered email ID. Enter the code and set a new password to log in to your account.

What is the difference between primary and contingency nominees?

In the abnormal circumstances where the primary nominee passes away prior to the Account Owner, the remaining portion may be payable proportionately to any surviving primary nominee.

In the event that there isn’t a surviving primary nominee, the contingent nominee will receive the assets pursuant to the allocation identified.

In the event a contingent nominee passes away prior to the Account Owner, then the contingent nominee share will be divided proportionately among the surviving contingent nominees.

How do I add a nominee to my account?

Ans:- Log in to your account, click on your name and navigate to “Profile” under the settings option. Choose “Nominee” from the options on the Profile page.

Click on the tab “Add Nominee[s]”. Fill out the following details under Primary nominee:

Name: Enter the full name of the nominee

Percentage: Percentage of holdings to be transferred to the nominee

Nominee Type: Choose the option from the drop-down as per the type of nominee being added. The nominee type can either be a person or an entity

Email: Email ID of the nominee

Date of Birth: Enter the DOB of a nominee

Phone Number: Contact number of the nominee

It is recommended to have at least 1 primary nominee, however, adding a contingent beneficiary is optional. You can add up to 4 primary nominees as long as the total adds up to 100%.

Similarly, you can also add up to 4 contingent nominees as long as the total adds up to 100%.

Primary Nominee

Contingent Nominee

Once the relevant information is filled you can click on “Save changes” to save the nominee details.

How would Stacks transfer the holdings and cash balance to the nominee?

In the unfortunate case of the demise of the account holder, the nominee(s) added by the holder on the “Profile” page gets ownership of the user’s portfolio (holdings and cash balance). Our broker partner will transfer the securities to the nominee(s) or liquidate the securities and credit the proceeds to the Primary nominee(s).

In the event that no primary nominee survives, the contingent nominee(s) will receive the asset(s).

What happens on the demise of the primary nominees?

Ans:- In the abnormal circumstances where the primary nominee passes away prior to the Account Owner, the remaining portion will be payable proportionately to any surviving primary nominee.

In the event that there isn’t a surviving primary nominee, the contingent nominee will receive the assets pursuant to the allocation identified.

How do I update my name or KYC documents?

Ans:- To modify your name, you will need to send in a request from your registered email ID along with a matching government ID proof (name should also match with your bank records).

List of valid documents-

· Passport (non-expired)

· Voters identification with photo

· PAN card

· Aadhaar Card( With date of birth)

For updating KYC documents — If your account is pending KYC approval, you can remove the existing uploaded document and instead re-upload the new one. If your account is already KYC approved, you can email us the updated KYC document that needs to be changed from your registered email ID and ask us to re-upload the same.

Can HUFs or business entities open an account on the platform?

No, as per RBI guidelines only individuals who are retail investors can create their international investing account on our platform.

How do I transfer funds/securities from an existing Drivewealth account to my Stacks account?

Ans:- You need to fill out an internal transfer form to transfer securities and/or funds from one DriveWealth account to another DriveWealth account. Please contact our support team via chat, email, or phone for the internal transfer form. When the completed form is sent back to us, the transfer of your account will be initiated. We do not levy any charges for the incoming transfer of accounts or shares.

Transfers cannot be made to beneficiaries other than the current account holders.

How do I find my US Stacks account number?

Ans:- Login to your account, click on your name and navigate to your profile under the settings option. You can find your brokerage account number mentioned under basic details along with your username.

How soon can I start investing?

Ans:- You can start investing as soon as you have money in your brokerage account.

Once your brokerage account gets approved (you will be notified), you will fund that account by doing a bank transfer from your domestic account. Stacks works with multiple domestic banks to make the process easy and seamless for you and also to get you very low forex rates. You can do all this sitting at home or at the office. Then it takes 2–3 business days for the transferred money to reflect in your account. You can start investing immediately afterwards.

Are US Stacks traded in real-time?

STACK orders can be placed 24x7 but the execution of each order will occur during U.S. market hours.

Can you cancel a US Stack order?

No. Once an order for a STACK is placed, it cannot be cancelled or refunded. However, once you have purchased a STACK — you can sell it anytime.

Do you get dividends from Stacks?

Yes. If there is a dividend payout from a Stock — the dividends are directly deposited in your investment account.

I am unable to invest in a Stack. Why?

Access to invest in STACKs is determined by your pricing plan. Certain STACKs may be available only to premium plans. You can upgrade your plan in the “Profile” section in account settings.

Is there a minimum investment for each Stack?

Yes, there is a minimum investment amount that is required for investing in a Stack. The minimum investment is available in the individual STACK detail page.

Fees & Pricing for Stacks

Each STACK has a fee which is computed as a percentage of the investment amount. The fee can range from 1% to 2.5% of the investment amount — and is charged on a periodic basis (quarterly or annually). The fee for a particular STACK is available on the individual STACK detail page.

How does taxation work?

Ans:-There is no TDS (Tax Deduction at Source) for your stock market capital gains in the U.S. So when you send money back to your Indian bank account, the broker in the U.S. does not deduct any tax on it. You will have to pay Short-term Capital Gains Tax OR Long-term Capital Gains Tax in India, whichever is applicable. Short-term Capital Gains apply if a security is held for less than 24 months.

A 25% TDS applies only to your dividend earnings. Your dividend earnings received as cash or reinvested will also be taxed in India at the applicable income tax slabs by adding it to your current income. However, India and the U.S. have a Double Taxation Avoidance Agreement (DTAA). This means that you pay dividend tax only once. For the TDS paid on your dividend earnings, the 1042-S form can be downloaded via Reports on our platform. You can use it while filing your taxes in India to show that you have already paid taxes on this income. You will be able to offset the tax withheld in the US and adjust it with the tax liability in India.

What insurance or protection do I get for my US Demat account?

Ans:-US brokerage ecosystem recommends that every investor account should have insurance.

Stack’s brokerage partner, DriveWealth LLC, a member of the Securities Investor Protection Corporation (SIPC), will serve as the custodian for your securities account. In the event that DriveWealth LLC fails and is placed in liquidation under the Securities Investor Protection Act, securities in your brokerage account may be protected up to $500,000. For details, please see www.sipc.org.

Please note that this USD 500,000 is not applicable to general losses in the stock market. SIPC says the following: SIPC protects against the loss of cash and securities — such as stocks and bonds — held by a customer at a financially-troubled SIPC-member brokerage firm. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. A non-U.S. citizen with an account at a brokerage firm that is a member of SIPC is treated the same as a resident or citizen of the United States with an account at a brokerage firm that is a member of SIPC.

SIPC does not protect against the decline in value of your securities. SIPC does not protect individuals who are sold worthless stocks and other securities. SIPC does not protect claims against a broker for bad investment advice, or for recommending inappropriate investments.

What is LRS?

Ans:-Instituted by the RBI, the Liberalised Remittance Scheme or LRS is a set of policies that stipulates the maximum amount and purposes of remittance. Under the LRS, an individual can annually invest up to USD $250,000 in any country, without seeking approval from the RBI. To monitor the remittance of individuals, remitters are required to fill out and submit a Form A2, which is provided by RBI-appointed Authorized Dealers. The form captures the remittance amount, the purpose, and the individual’s PAN number. Once the form is received, the Authorized Dealer will verify the information and process the remittance. The Authorized dealer in this case is the bank that has been chosen for remittance.

What are the TCS provisions (including thresholds, if any) in regards to the overseas investment made by an investor?

As per Finance Act, 2020, TCS @ 5% is applicable only if and when the foreign remittance in a Financial Year exceeds INR 7,00,000. It is pertinent to note here that TCS provisions on foreign remittance are applicable from 01–10–2020.

Can I claim the fees and brokerage paid as a deduction for computing my capital gains tax in India?

Ans:-Yes, any cost incurred on account of the sale or transfer of the asset is allowable as a deduction while computing the Capital Gains. However, it is pertinent to note that AUM charges and annual subscription charges incurred cannot be claimed as deductions as they are related to the holding of capital assets and not in relation to the transfer of capital assets.

Disclaimer: This article is for informational purposes only. None of the contents of this article should be treated as advice.

Am I expected to report my holdings or gains in India an annual basis — even if I don’t have a tax liability? If yes, under what section and what forms do I need to report the same in India?

Where a person is a ROR he/she is required to file his/her income tax return if the person has any kind of foreign assets.

The reporting in this regard would be as follows:

1. Details of foreign assets and income from any source outside India –

Schedule FA of the relevant Income Tax Return (ITR)

2. Details of Income from outside India (only in the case of resident and ordinarily resident) — Schedule FSI of the relevant ITR

Disclaimer: This article is for informational purposes only. None of the contents of this article should be treated as advice.

Do I need to pay tax on foreign dividends both in the US and India? Can I claim credit for the taxes paid on such dividends in India?

Ans:-Yes, tax needs to be paid on Foreign dividends both in US and India. However, an Indian Resident individual can claim Tax credit of taxes paid in US by virtue of the Double Taxation Avoidance Agreement (DTAA) entered into between India and US by filing a return of income in India. The maximum credit that can be availed is the amount of tax that should have been paid in India on the transaction if there is no DTAA.

Disclaimer: This article is for informational purposes only. None of the contents of this article should be treated as advice.

What is the tax on dividends received from foreign listed securities?

Interest received from foreign debt instruments will be subject to tax at normal slab rates for the Individuals and at applicable rates to Body Corporates as Income from Other Sources.

Can a Resident Indian utilise more than the amount specified (USD 2,50,000) under LRS for buying foreign listed securities?

An Individual cannot remit more than USD 2,50,000 in one financial year under LRS scheme. However, if a resident individual investor who is not permanently resident in India after having remitted their entire earnings and salary, wishes to further remit other income over and above the limit of USD 2,50,000, may approach RBI with documents through their Authorised Dealer Bank for approval.

Is there a limit on the maximum number of foreign securities to be held by an Indian Resident?

There is no maximum limit on the number of foreign securities that can be held by an Indian resident. However, under the LRS (Liberalised Remittance Scheme) an amount up to USD 2,50,000 per resident individual can only be remitted outside India in one financial year (April — March).

Can I take indexation benefits on the transfer of foreign listed securities?

Indexation is a benefit given to adjust the cost of capital assets held for the long term with respect to inflation. Since foreign securities are considered as unlisted, they must be held for at least 24 months to qualify as Long Term Capital Asset and avail indexation.

Can I carry forward the losses incurred from dealing in foreign listed securities under Income Tax Act?

Yes. The losses arising from the sale of foreign listed securities can be carried forward up to eight consecutive years while losses from speculative business can be carried forward for a period of 4 years.

Can I set off the losses incurred on the transfer of foreign listed securities with my other income in India?

All Short-term capital losses arising from the sale of foreign listed securities can be set off against both short-term and long-term capital gains in India. However, any long-term capital loss arising on the sale of foreign listed securities can only be set off against long-term capital gains in India. (Assuming there is no intraday trading).

What is the definition of Long-term Capital Asset (LTCA) and Short-term Capital Asset (STCA) w.r.t foreign listed securities? What are the tax rates if any capital gain (Long term or Short term) is accrued on the sale of such Capital Assets / Securities?

The time period for which a particular capital asset is held by its owner decides whether that asset is a short-term capital asset or a long-term capital asset. Shares of a company listed on foreign stock exchanges (unlisted securities for Income Tax purposes) shall be considered as LTCA if the same is held for more than 24 months in case of stocks and more than 36 months in case of ETFs.

Any shares held for a shorter duration than the period mentioned above shall be considered as STCA. The tax rate with respect to LTCG and STCG applicable to Indian residents has been provided below:

Am I liable to pay tax when I remit the funds back to India?

Ans:-No, the tax incidence is on the event of “Transfer” or a “Sell” of securities by the Client on Stacks platform. The remittance of any funds lying outside India has no connection with the tax incidence.

Is there any tax implication on transfer/remittance of funds on the platform for making investments in foreign securities?

Ans:-Transfer of funds into an external platform would not result in any profit/gain as it involves the only transfer of funds to self. Further, no transaction has been undertaken/executed resulting in any transfer of any asset.

However, w.e.f. 1st October 2020, any foreign remittance by resident individuals under Liberalised Remittance Scheme framed by RBI may trigger TCS (Tax Collection at Source) provisions which require the collection of tax by an authorized dealer @5% (10% in case of non-PAN / Aadhar cases) where the total foreign remittance including transfer of funds exceeds INR 7,00,000 per annum. In this regard, the transfer of funds into the US Stacks platform by way of foreign remittance may attract TCS. However, it is pertinent to note that the Authorised Dealer (bank) would be liable to collect TCS @ 5% on the amount exceeding INR 7,00,000

What are the tax implications in India if I am a Non-Resident Indian (NRI) residing in any country other than the USA?

Ans:-It is to be noted that earning Capital Gains on Us Stacks platform is not liable to tax in India. Irrespective of the country where NRI resides, any income of a non-resident is chargeable to tax in India only if it is accrued or received in India. As per ITA, deduction of expenditure or allowances is not available while computing investment income or long-term capital gains. Also, the indexation benefit is not available to an NRI while computing LTCG.

What happens to my account if I move to India or any other country?

Your US Stacks account continues to remain valid despite your relocation.

Does US Stacks give investing advice?

While US Stacks does not give recommendations to its users, we have quite a few features on the platform that helps users shorten their decision cycles.

In order to help you discover ideas, Stacks automatically gives you “Trending Stocks”, stocks that you might like (based on your investing profile), other stocks related to any stock that you may be looking at, stocks with breaking news, stocks buzzing on social media, stocks, and ETFs in themes or sectors you may be interested in … and a lot more.

Additionally, for every security (stock or ETF), Stacks gives decision support indicators and data based on the company’s past performance, analyst’s opinions of stocks, Morningstar ratings, Asset Allocation, Sector, Industry allocation for ETFs and the company’s predicted performance trends.

Does US Stacks provide any research support?

US Stacks has a lot of data and research available for various kinds of investors. If you are a hobbyist investor, you will see stocks you might like (based on your investing patterns, the time you spend on various kinds of stocks, your watchlist, etc.) If you are an experienced investor, you can make good use of the sophisticated stock screener that US Stacks provides.

US Stacks also gets you various kinds of investment intelligence from sources such as analyst reports, Morningstar ratings, regulatory filings of companies, breaking news, and social media.

What are the market hours?

Regular trading hours for the U.S. stock market, including the New York Stock Exchange (NYSE) and the Nasdaq Stock Market (NASDAQ), are 7:00 PM to 1:30 AM IST on weekdays (except stock market holidays). During daylight savings, the timings are changed to 8:00 PM to 2:30 AM IST.

What is the settlement period?

The settlement period is T+2 business days. You will be able to see unsettled cash in your account balance as a result of sale proceeds. The unsettled cash will also reflect in the ‘Cash Settlement’ section until it is settled to your account.

Is intraday trading allowed on the platform?

Stocks that are bought with settled funds can be sold on the same day without any restrictions. However, since the settlement cycle is T+2 days, stocks bought with unsettled funds and sold before the settlement period will result in a Good Faith Violation. To know more about Good Faith Violation, please click here.

Margin trading is not allowed in international stock markets as per RBI regulations.

Which reports are available on the platform? Can I get an account statement?

The below reports are available for your international investment account on the platform

  • Monthly Account Statement & Holdings Report
  • Dividend Tax
  • Financial statement
  • Trade confirmation
  • Profit and Loss
  • Offline LRS details

Please login to the platform and click on ‘Reports’ from Account Settings to view all the reports.

Is short selling or margin trading allowed on the platform?

No, we do not allow short-selling or margin trading on our platform. As per RBI regulations, margin trading is not allowed in international markets.

What is a Good Faith Violation?

If a security purchased in the customer’s cash account is sold prior to being paid for with settled funds in the account, a good faith violation has occurred. The reason it is referred to as a good faith violation is that trade activity is giving the appearance that sales proceeds are being used to cover buy orders when there is insufficient settled cash to cover these purchases. Basically, trade activity indicates that a good faith effort to deposit additional cash into the account will not happen.

Accounts with three good faith violations in a 12-month period will be restricted to purchasing securities with settled cash only for a period of 90 days.

Example:

Ms Sudha has a US brokerage account with $1,500 cash in it, fully settled.

On Monday afternoon, Ms. Sudha purchased $1,500 of X stock. She sells the X stock for $1,600. The funds from the sale are expected to settle on Wednesday. Up till now, this is not a ‘good faith violation’ as her account was fully funded to pay for the purchase of the X stock.

However, during the closing hours on Monday, Ms. Sudha purchases $1,600 of Y stock again. No Good faith Violation incurred yet.

The next day (Tuesday), she sells her entire holding of Y stock and thus suffers a GFV. This Tuesday trade is a violation as Ms. Sudha sold the stocks she bought with unsettled funds.

Note:

- Buying a stock with unsettled funds is not a violation but selling the same even before the said cash is settled leads to the violation. Violation can be avoided by selling the stocks that were bought with unsettled cash after the cash settlement.

- Settled funds means the amount is settled in your account and can be used to trade or withdraw whereas unsettled funds is the amount to be received from the Sales proceeds and is in the process of being settled for you to use the same.

What is a stop order?

A stop order, also referred to as a stop-loss order, is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a market order.

A buy stop order is entered at a stop price above the current market price. A sell stop order is entered at a stop price below the current market price.

When can you use a limit order?

Ans:-The best way to use the limit order facility is when you’ve decided that you will buy a stock only if it’s price touches or goes below the price you want. Conversely, it might be a good idea to use limit order while selling a stock if you expect a certain minimum price for the same.

What is a limit order?

Ans:-A limit order is an order to buy or sell a stock at a specific price or better. Therefore, a buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

A limit order is not guaranteed to execute because it stands only for the day and it’s possible that the price you specify, for a particular stock, is not reached during the day.

Are there any risks associated with placing a market if touched order?

The Market if touched (MIT) orders are executed as market orders and hence get executed at the market price at that point. Hence the price at which the order is executed may be higher or lower than the expected or specified price.

What is Market if Touched order?

A market if touched (MIT) order is an instruction to buy or sell a stock when a specified price, the order was placed at, is touched, even if it does so very briefly.

When the price hits the level specified in the market if touched order, It turns into a market order and is executed at the next best price. This price can be higher or lower than the specified price.

For example, you are interested in a stock that has its current market value at $22.5 per share. You place a market if touched order with the condition to buy 1 quantity of share at a price of $21.5 dollars. The moment the price of the share falls to $21.5, even if it is just for a few seconds, your order gets converted into a market order and gets executed at the market price at that point.

A market if touched order is valid for 90 days and will get cancelled if not executed.

How is a market if touched order is different from a Limit order?

A limit order guarantees that an order is filled at a specified price level. However, there is no guarantee that it would get executed. Additionally, A limit order only allows for the whole quantity of shares to be bought or sold.

A market if touched(MIT) order, on the other hand, has a higher chance of execution as the order initiates once the specified price is reached and gets executed at the next available price. This order, however, does not guarantee a price. It can also be considered an ideal alternative to limit order where it provides the flexibility of fractional trade to the investors.

What is extended hours trading? How does it work?

Extended hours trading is trade conducted by electronic networks either before or after the regular trading hours of the listing exchange where users can trade before the market officially opens and after it closes. Users can place Limit orders on the platform during extended market hours within the below timings:

  • Pre Market hours: 4:00 AM EST — 09:30 AM EST
  • Post Market hours: 04:00 PM EST — 06:00 PM EST

To carry out an extended hours trade, you would need to log in to your account and click on the stock page to place an order. Our platform then sends your order to the Electronic Communication Networks (ECN) which is a computerized system to automatically match buy and sell orders. The ECN attempts to match your order to a corresponding buy or sell order on the network. If it can match your order, the trade is executed or it is queued and cancelled by the end of the day if no buyer or seller can be found.

How is extended hours trading useful to me?

The Extended hours trading increases the time that is available for you to trade in U.S. Markets as pre-market and post-market hours enable you to trade outside regular market hours so you can act quickly on news like company earnings releases and events that occur when the exchange is closed. The pre-market hours also often act as an indicator for predicting the market direction when the market opens. To know more regarding risks associated with trading in extended hours click here.

Can extended hours trade orders be placed during market hours?

Yes. An extended hours trade order can be placed at any hour of the day by following the steps mentioned on the link here. The orders can get executed during pre-market hours, market hours, or post-market hours

Pre Market hours: 04:00 AM EST — 09:30 AM EST

Post Market hours: 04:00 PM EST — 06:00 PM EST

How can I place an extended hours order on the platform?

To place an extended hours trade, you would need to log in to your account and follow the below steps:

Step 1: Select the stock you want to buy.

Step 2: Enable the “Extended Hours Trading” toggle on the top right-hand corner of the Stock Page and enter the quantity(has to be whole values) & target price.

Step 3: Click on “Review Order” and enter your Pin number to place the order

Note: In case of Extended Hour trading, only a Limit order can be placed. Click here to know more regarding Limit order.

Extended hours orders are valid until the end of the day. It will get cancelled in case it is not executed within the day. Orders placed after 6 PM EST will get cancelled by the T+1 day, if not executed.

How can I cancel an extended-hour trade order?

You can cancel an extended hour trade order by following the below steps:

Step 1: Navigate to the “Order” section on the menu bar at the top of the screen.

Step 2: However, on the order status. Click on “Cancel order

Step 3: Click on “Yes” to confirm the cancellation of the order. Order will be canceled if not executed already.

What are the risks associated with extended hours trading?

After-hours trading comes with several risks that are typically not associated with trading on an exchange during regular trading sessions. These include:

1. Limited liquidity

Extended hours have less trading volume than regular hours, which could make it difficult to execute trades. Some stocks may not trade at all during extended hours.

2. Large spreads

Less trading volume often translates to wider bid-ask spreads, which can adversely affect the market price for execution, making it harder to execute orders at favorable prices.

3. Increased volatility

Less trading volume often creates an environment for greater volatility given the wider bid-ask spreads. Prices can move drastically in a short amount of time.

4. Uncertain prices

The price of a stock trading outside of regular hours may not closely match the price during regular hours.

5. Professional competition

Many extended trading participants are large institutional investors, such as mutual funds, that have access to more resources.

To know more regarding risks associated with trading in extended hours click here.

Are there any limits on Extended Hours Trading?

Since extended hour trades are only allowed for limit orders, the minimum quantity that can be traded is 1 share and hence fractional investing is not currently allowed for limit orders or extended hour trades. A user can place an extended hours trade for a maximum of 10,000 shares.

Can NRIs invest via Stacks?

Yes, NRIs can invest through Stacks. If the funding is being done through their NRE account or a foreign bank account that does not fall under LRS, a direct online bank transfer can be performed.

However, if an NRI wishes to add funds through his NRO account, he would have to submit a 15 CA & 15 CB form through a chartered accountant. To know more regarding fund transfers through an NRO account please reach out to your personal banker/relationship manager.

What are the KYC documents required for NRIs?

The following KYC documents are required for ID & Address proof for NRIs -

International Customers:

  • ID Proof:
  • Resident Permit (front & back)
  • National ID (front & back)
  • Passport (with photo)
  • Drivers Licence (front & back)
  • Proof of address:
  • Resident Permit (front & back)
  • National ID (front & back)
  • Drivers Licence (front & back)
  • Utility bill

Note: Address Proof should have a physical address, only P.O.Box is not accepted as address proof.

Are there any bank charges for adding funds to my account?

Ans:- Stacks does not levy any fees or charges for adding funds to your account. However, your bank might charge fees for international outward remittance which varies per bank. Please check with your bank or login to your NetBanking account to see the bank charges.

A fee of $5 would be deducted from the first fund transfer by Stacks s brokerage partner, DriveWealth, towards Tax Certification (W-8 Ben), a one-time fee upon a non-US account opening.

Can I invest in IPOs on your platform?

No, we do not enable international investors to invest in U.S. IPOs due to regulatory restrictions. However, you can invest in the stock once it is listed and starts trading on the U.S. market.

Who owns the US stocks?

You own the stocks through your account with Stacks and DriveWealth.

How many securities are available on Stacks?

Stacks offers over 5,500 stocks and ETFs (Exchange Traded Funds) listed on NASDAQ and NYSE — as of now. Our platform includes almost all the marquee listed companies in the US with billion-dollar market caps.

Which are the countries from where Stacks can be used?

Stack is currently available to investors in India and most of the countries in Middle East & North Africa (MENA).

We will shortly become available to investors in other South-east Asian Countries.

Which stock markets are available on the platform?

Currently, Stacks helps you invest in US stock markets.

In the near future, we will have multiple other markets available — Germany, Japan, India, UK, and Hong Kong. Over time, we will make investing totally ubiquitous — if you have an idea or come across a company you want to invest in, you will be able to make that investment without having to think if that stock is listed domestically or in some other country.

Interestingly, many large global companies have US-listed ADRs which are available on US Stacks. From Chinese giants like Alibaba to many Indian and European companies are all available.

What are some potential 3rd-party costs that I can expect?

Miscellaneous Charges

  • $5.00 Tax Certification (W-8 Ben). One-time fee upon a non-US account opening
  • $20.00 Returned Checks
  • $25.00 Check Stop Payments
  • $20.00 Overnight Check Delivery
  • $30.00 Returned Wire Transfers (applies to attempted third-party wires)
  • $50.00 1099 Request for Exempt Accounts
  • $25.00 Tax Document Request (Fax and Regular Mail)
  • $3.00 Physical Copy of Trade Confirmations (per confirmation)
  • $5.00 Physical Copy of Monthly Account Statement (per statement)

Withdrawal/ Administrative Request Charges

  • $3.00 Paper Check / e-check (USD)
  • $0.25 ACH Transfer (outgoing)
  • $10.00 Outgoing Domestic Wire Transfer
  • $10.00 Outgoing International Wire Transfer

Who is the custodian of my account?

Stack’s US brokerage partner, DriveWealth LLC, is the custodian of your brokerage account.

What is the safety-net on my account? What if Stacks goes down?

Your international investing accounts are held by brokerage and clearing services provider DriveWealth LLC and will serve as the custodian for your securities account. If Stacks goes down, your account will still be safe and secure with DriveWealth LLC and you will be able to access it and/or move it to another brokerage firm as you please.

Additionally, you also have automatic insurance on your US investing account.Read more about this click here FAQ (finmapp.com).

Do I get voting rights on fractional stocks? And what about dividends?

You don’t get voting rights on fractions of stock you own. For example, if you own 34.5 stocks of a company, your voting rights will be for 34 shares.

You are eligible to receive dividends on fractional shares. Example: If a hundred-dollar dividend per share is announced, you will get $3,450 on 34.5 shares. However, we cannot give you fractional money, thus, if you own 0.0001 stock and the dividend announced is $5 per stock, you will not be able to receive half a cent.

How do fractional shares work?

One of the unique things about the US stock markets is that investors can own fractions of stocks unlike markets of countries like India. For example, you could own 0.05 of Apple stock. Our brokerage partner DriveWealth allows you to own as low as 0.0001 shares of any stock. This is an advantage for 2 main reasons:

  • You don’t have to think in terms of “how many shares should I buy?”. You can simply decide to invest a certain amount of money and the number of units to be allocated to you gets automatically calculated and would get credited to your account. For instance, if a stock is valued at $27 and you decide to invest $100 in it, you will get 3.70 shares.
  • Many popular US stocks are more expensive than typical Indian stocks. While a single Apple stock is valued at over $200 as of this writing, Google costs over $1,000 and Amazon costs more than $2,000. Pepsi, Nike, Coke — all between $100 and $200 as of the writing date. Hence, with fractional stocks, you could effectively build a pretty diversified portfolio with small amounts of money.

Where is my US investing account held?

Ans:-Your investing (brokerage) account is opened at our US brokerage and clearing services partner DriveWealth LLC — a FINRA regulated brokerage firm. It is a licensed carrying and self-clearing broker offering brokerage services to global investors. DriveWealth is backed by Softbank Group and other leading venture capital firms in the financial services ecosystem.

The custody of your account, in turn, would be held by DriveWealth. Reach out to the support team in case of further questions.

How much can I invest in US stocks from India?

Currently, you can invest up to USD 250,000 every year in foreign stocks from India. This amount can change, subject to RBI guidelines. So your investments in US securities are also governed by the same limit.

Foreign investments fall under clearly defined RBI guidelines. The remittance of money for foreign investments comes under the Liberalized Remittance Scheme (LRS). Under LRS an Individual can remit up to USD 250,000 per financial year to invest in foreign equities done through an authorized dealer (commonly, your bank). As per the RBI policy, having a PAN card is required to purchase shares in foreign countries. You can find more information on the LRS scheme on the RBI website here.

Disclaimer: This article is for informational purposes only. None of the contents of this article should be treated as tax advice. Please consult a qualified tax consultant or expert with your specific taxation situation for appropriate advice.

Summary:

When it comes to creating an inflation-beating portfolio that can mitigate the market risk and give you a better return opportunity, having 10–15% exposure to international stocks, ETFs is always advisable. You can craft a well-diversified and well-rounded portfolio of domestic and international stocks and give yourselves a chance to build wealth with minimum risk and fuss.

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