ICAI allows members to trade in equity derivatives



Quick Summary
The Institute of Chartered Accountants of India (ICAI) has officially permitted its members to trade in equity derivatives for their personal investments. This decision, made by the central council, aligns with the existing allowance for members to trade in shares. However, members are prohibited from trading in commodity derivatives and cannot trade in either equity or commodity derivatives on behalf of clients.

The central council of the CA Institute has given its approval for members to trade in equity derivatives. However, ICAI members cannot trade in commodity derivatives, Nihar Jambusaria, President, Institute of Chartered Accountants of India (ICAI), told BusinessLine.

When it came to clients, a CA Institute member cannot trade in both equity and commodity derivatives for them, he added. Jambusaria said this issue was referred to the central council by the Ethical Standards Board of the Institute. The question before the council was whether members can invest or trade in equity derivatives on a proprietary basis.

ICAI Members Can Now Trade Equity Derivatives

ICAI’s reasoning

' We have, in the recent council meeting that concluded on Friday last, given formal approval allowing members to trade in equity derivatives for their own account. Our reasoning was that when trading in shares is allowed for members, then equity derivatives should also be allowed, but only for self and not on behalf of anybody,' Jambusaria said.

The ICAI President noted that this question of allowing members to trade in equity derivatives had been coming up before the Ethical Standards Board from time to time. This Board had, in the past, rejected approval for the same.

A chartered accountant in practice has always been allowed to invest or trade in equity shares (and not their derivatives) on a proprietary basis. They cannot do it on behalf of clients as this was not allowed when one is engaged in a CA practice.

The CA Institute has over 3.15 lakh members and over 90,000 firms specialising in traditional areas of audit, direct, indirect and international taxes, including GST, and in emergent areas like insolvency, financial services and corporate re-structuring.

FAQ :

Yes, the ICAI central council has approved members trading in equity derivatives for their own account.

Members can only trade equity derivatives for themselves and not on behalf of clients. Trading in commodity derivatives is also not permitted.

The ICAI's reasoning is that if members are allowed to trade in shares, they should also be allowed to trade in equity derivatives for their own investments.

Previously, the Ethical Standards Board had rejected approval for members to trade in equity derivatives. While trading in equity shares was allowed, their derivatives were not.

No, chartered accountants engaged in practice cannot trade in equity or commodity derivatives on behalf of clients.




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