Any capital gains tax for securities transactions on Euroclear platform will hamper market liquidity significantly, the clearing institution said days ahead of the union budget when the government is expected to tweak levies for foreigners.
“This would mean that we would have to change our basic model and split the omnibus model to a segregated mode,” Sudip Chatterjee, head of global capital markets at Euroclear, said in response to queries from Bloomberg News. It “is not feasible and defeats the key purpose on why countries include sovereign papers in global indices,” he said.
Chatterjee didn’t comment on the progress of talks with New Delhi on using Euroclear’s platform for settling transactions involving Indian government bonds. While listing on international clearing platforms isnt a necessary condition to being included in global bond indices, global investors prefer it as it provides significant operational ease.
Euroclear operates in 49 countries and none of them subject their securities to tax on the platform, Chatterjee said.
There is increasing chatter about tax exemptions to trading of Indian bonds in offshore clearing houses, according to ICICI Securities Primary Dealership Ltd. Such tax breaks would make it easier for Indian bonds to be traded globally and that would also open up the market to a bigger pool of investors, economists including A. Prasanna wrote in a note.
However, a key ally of Prime Minister Narendra Modi’s party is opposed to a separate carve out for foreigners and wants a level-playing field for domestic investors. Finance Minister Nirmala Sitharaman will present the annual budget on Tuesday.
“This would mean that we would have to change our basic model and split the omnibus model to a segregated mode,” Sudip Chatterjee, head of global capital markets at Euroclear, said in response to queries from Bloomberg News. It “is not feasible and defeats the key purpose on why countries include sovereign papers in global indices,” he said.
Chatterjee didn’t comment on the progress of talks with New Delhi on using Euroclear’s platform for settling transactions involving Indian government bonds. While listing on international clearing platforms isnt a necessary condition to being included in global bond indices, global investors prefer it as it provides significant operational ease.
Euroclear operates in 49 countries and none of them subject their securities to tax on the platform, Chatterjee said.
There is increasing chatter about tax exemptions to trading of Indian bonds in offshore clearing houses, according to ICICI Securities Primary Dealership Ltd. Such tax breaks would make it easier for Indian bonds to be traded globally and that would also open up the market to a bigger pool of investors, economists including A. Prasanna wrote in a note.
However, a key ally of Prime Minister Narendra Modi’s party is opposed to a separate carve out for foreigners and wants a level-playing field for domestic investors. Finance Minister Nirmala Sitharaman will present the annual budget on Tuesday.
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