The trading account allows the NRIs in order to make investment or trade in online in the stocks, derivatives, IPOs, Mutual Funds, and Bonds at the Indian Stock Exchanges i.e. BSE and NSE. Holding a trading account is a compulsion for NRIs if they are willing to trade in the stock market listed firms in India.

NRI needs a bank account, demat account and a trading account in order to initiate investments in the Indian Stock Market. The NRIs are allowed to invest or trade only in equity and currency derivatives. They are not allowed to trade in the commodity derivatives and also, they cannot trade in Intraday.

The NRI can open their trading account with any broker such as Zerodha, ICICI Direct and much more to trade online. Every trading account has a unique trading Id that can be used for conducting various transactions.

Holding such an account helps the customers in making online stock market investments. It acts as a middle man of all the stock market transactions that are performed between a bank account, demat account, stock exchange and the NRI Investor.

NRI Order Execution Steps for Equity Trades

1. The customers can place buy or sell orders by using the trading account through trading software by the stock broker.
2. It sends the order to the stock exchanges i.e. NSE or BSE.
3. The exchange sends the confirmation text to the broker once the order is executed.
4. The broker sends an invoice with the trading details to the linked bank where the customer holds a bank account.
5. The bank transfers the money to the broker if it is a buy order.
6. The shares are deposited to the NRI Demat account if NRI has to buy order.
7. The shares are debited from the demat account and ae transferred to the buyer if NRI is selling an order.

Note:

The broker sends a contract note to the custodian that will settle the trade on the behalf of the customer in Equity Derivative Trading.

NRI Trading Account Types The NRI trading account is divided into two types:

1. NRI 3-in-1 Account- This account is an integrated account that is combined of three accounts i.e. NRI Trading account, NRI Demat account and NRI Bank account. It is also termed as 4-in-1 account by some of the stock brokers.

   The three-in-one account serves more convenience to invest in the Indian Stock Market. Most of the transactions between the three accounts are fluent and are taken care by bank offering in the 3-in-1 account.

   It is offered by several banks in India such as ICICI, HDFC, SBI, Axis Bank, Yes Bank, etc.
2. NRI 2-in-1 account- This combines an NRI Trading Account and NRI demat account. Such accounts are mostly provided by brokers that do not provide banking license. NRI needs to have a PIS, NRE and NRO bank account on their own before opening a two-in-one account.

Note:

NRI Trading Account is different from NRI Demat Account. Trading account is to make trades in the stock exchanges by the help of a stock broker whereas the demat account holds the securities bought in those trades in electronic format. Opening both the accounts is a compulsion in India to trade in the stock market.