FEMA Question for Option Trading

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Vikas v (Querist)
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06 June 2026 Hey, quick question - I'm an Indian resident with a pre-existing Charles Schwab account, funds built entirely while living abroad. Currently trading options on a cash account under FEMA Section 6(4). Schwab allows upgrading to Level 2 margin account for multi-leg spreads - no actual borrowing involved, just an account classification change. Would this be permissible under FEMA? Would love your thoughts.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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06 June 2026 Generally prohibited under FEMA for Indian residents, even if the account is "fully funded" or leverage is not utilized. Upgrading to a "margin" account is likely to be viewed as a violation of permissible investment activities under the LRS framework. Keep the account as a "Cash Account" to maintain compliance and consult a qualified FEMA expert for further clarification.

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