Where is the account held? Who is responsible for the custody and clearing?
The brokerage account is managed by ViewTrade securities - an SEC registered and FINRA regulated broker for books and records, which works with Apex Clearing Corporation for trade the clearing and custodian aspects of user accounts.
Am I legally allowed to invest in foreign markets?
Yes, under the RBI’s LRS (Liberalized Remittance Scheme), any Indian resident can invest upto a limit of $250,000 per financial year in the foreign market. All LRS based investments are moderated by RBI guidelines.
Can I use my existing Indian Groww Balance to fund my US account?
No, Groww balance can only be used for Indian stock and MF investments and not for US stocks. This is an international wire transaction and the account is being opened at Groww’s broker partner’s end. Before you trade, the funds have to be directed under the LRS process. You are funding your own brokerage account from India to invest in US stocks. You could consider this as your USD balance.
What insurance do I get for my account?
US brokerage regulations recommend that every account should be insured as per the SIPC insurance act. Groww’s brokerage partner ViewTrade Securities is a member of the SIPC, which protects all securities and cash holdings in your accounts up to $500,000, of which $250,000 may be in cash. The SIPC protects the investors’ assets in a financially-troubled SIPC brokerage member firm. Please note that this $500,000 is not applicable on general losses in the stock market.
What are tax implications?
Taxation for US stocks is very straight forward. Due to the Double Taxation Avoidance Agreement (DTAA) between India and the US there is no tax on capital gains deducted in the US for Indian residents. You will have to pay for capital gains tax in India based upon long term (above 24 months) and short term (below 24 months) holdings of your investments.