Wednesday, May 26, 2010

The importance of the Standard Chartered IDR

I have a column in Financial Express today on this. You might like to also see this older blog post.


  1. For diversification, it is far more useful to have the ability to transact directly on foreign exchanges. ICICI allows investing abroad now, Interactive Brokers has opened up shop in India, and a bunch of other US brokers allow direct US exchange trading for Indians (and other non US residents). I'm not sure, but I think there is a limit on US brokerage account balances by SEBI?. All that is needed is perhaps a high enough limit to not significantly obstruct investing outside India.

    Interesting that the other side of the diversification coin is that SC probably listed its IDR here to gain a correlation component to the NIFTY/Indian economy/markets.

    The article mentions that India has one of the most sophisticated stock futures market: as far as index futures go, we hardly have any liquidity beyond NIFTY (more of a lament, not contesting the organizational sophistication point). Secondly, I'm curious to know why individual stock futures are not popular in places like the US. Perhaps, it is popular in India only because of STT being significantly lower for derivatives, and easier margin/short term trading rules? In the US, with no such distinction perhaps the individual stock futures market is redundant? I curious about if and why it is better to have individual stock futures (as opposed to the same rules for delivery based stock trading)?

  2. What about the need to raise "Rupees" to be able to do business in India? i.e. provide for capital in rupees considering that they are gonna expand in India, reduce foreign exchange risk, source of INR access which they can provide to their customers(on a side note, I reckon they advised on the Airtel deal and may have provided loans to them, GoI wanted the telcos to pay in INR not in USD, fortunately). This IDR issue, I think, clearly indicates an elevation of our currency's status.


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