FEMA Question for Option Trading
This query is : Resolved
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.
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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