The Reserve Bank of India (RBI) has intensified its efforts to combat unauthorised forex trading platforms, emphasizing the need for heightened vigilance among banks. Governor Shaktikanta Das has raised concerns about banking channels being exploited for funding these platforms, prompting the RBI to take decisive action.
Framework for Authorisation of Electronic Forex Trading Platforms
The RBI has implemented a robust framework for the authorisation of electronic trading platforms since 2018. This framework ensures strict compliance with regulations and is currently being updated to keep pace with technological advancements that have revolutionized financial markets.
Cautionary Advice and Alert List:
In response to complaints of cheating and fraud associated with unauthorised trading platforms, the RBI has issued cautionary advice against engaging in forex transactions on such platforms. Additionally, the central bank has circulated an ‘Alert List’ featuring entities that promote or offer unauthorised forex trading facilities. This measure aims to protect consumers from potential risks associated with unregulated platforms.
Identifying Unauthorised Entities
The RBI has recently released a list of 75 entities that are neither authorised to conduct forex dealings nor operate electronic trading platforms for forex transactions. This list includes prominent names such as alpari, Anyfx.com, Binomo, and Ava Trade. By identifying these unauthorised entities, the RBI aims to safeguard investors and maintain the integrity of the forex market.
Focus on Retail Customer Protection and NDS-OM
Governor Shaktikanta Das has stressed the importance of equitable treatment for retail customers in the forex market. He has advocated for transparency in pricing and finer pricing for smaller deals. To facilitate this, Das has urged banks to promote the use of Negotiated Dealing System-Order Matching (NDS-OM) platform. The NDS-OM platform enables fair pricing and improved participation for retail customers, bridging the pricing gap between small and large customers.Furthermore, he has encouraged greater participation of Indian banks in derivative markets, both domestically and offshore.
Enhancing Participation in Derivative Markets
In addition to protecting retail customers, Governor Das has encouraged Indian banks to enhance their participation in derivative markets, both domestically and offshore. He emphasized the importance of banks conducting due diligence, assessing risk appetite, and proceeding cautiously while expanding their presence in rupee derivatives markets.
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The RBI’s crackdown on unauthorised forex trading platforms, along with its call for increased vigilance from banks, aims to protect consumers and maintain a fair and transparent trading environment. By implementing a stringent framework, issuing cautionary advice, identifying unauthorised entities, and promoting the use of the NDS-OM platform, the RBI demonstrates its commitment to safeguarding the integrity and security of the forex market in India.