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Green signal: CA Institute allows members to trade in equity derivatives – BusinessLine

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.

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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.

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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.