i am a trader in the indian commodity markets. i have a few friends/clients abroad who are willing to invest money.
all that i want to know is that - is it legal for me to trade on their behalf in CFD's forex and other speculative instruments available in the developed markets.
they will be opening the accounts in their name and i will trade on their behalf from india, but i will not be depositing any money in $ to them.
PLease let me know. if there are any permissions that need to be obtained for the same , pls let me know
Thanks for the response. Can you please elaborate? for eg: if i ahve my friend open an account in NYSE through a registered broker of that exchange - what are the things that i need to do to trade in his account from India
02 August 2025
Hey! Trading on behalf of foreign clients from India involves important legal and regulatory considerations. Here’s a detailed overview:
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### 1. **Can you trade on behalf of foreign clients from India?**
* **Directly trading on behalf of foreign clients without proper registration is generally NOT allowed.** * Only **registered intermediaries** (like SEBI-registered brokers, portfolio managers) can operate client accounts. * You **cannot manage or trade in a foreign client’s account from India unless you have necessary licenses** and comply with regulations.
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### 2. **If your friend opens an account abroad (e.g., NYSE), can you trade in their account from India?**
* Even if the account is in your friend's name abroad, **you cannot trade on their behalf from India without authorization and compliance**. * The account holder must give you a **power of attorney** or **trading authorization** as per the broker’s rules. * Indian laws (like FEMA—Foreign Exchange Management Act) and tax regulations come into play for money movement and reporting.
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### 3. **Permissions and Regulations**
* You need to check:
* **FEMA regulations** for handling foreign exchange and investments. * Whether you require registration as a **Portfolio Manager** or **Investment Adviser** with SEBI if you handle investments professionally. * **Income Tax implications**: Income earned on behalf of foreign clients may have withholding tax or other compliances.
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### 4. **Practical aspects**
* Your foreign client opens a brokerage account with a registered broker in their country. * You can trade if you have **written authorization** from your client (power of attorney). * Some brokers allow remote trading via authorized persons or trading representatives. * Indian laws require you to report any foreign exchange transactions properly.
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### **Summary**
| Point | Details | | -------------------------------------------------- | ---------------------------------------------------------- | | Legality of trading for foreign clients from India | Requires proper authorization and registrations | | Account ownership | Must be in client’s name, with power of attorney for you | | Regulatory compliance | SEBI registration (if managing professionally), FEMA rules | | Tax and reporting | Compliance with Indian and foreign tax laws |
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If you want, I can help you draft a **Power of Attorney document** or guide you on how to register as a portfolio manager or adviser.
CAclubindia
