RBI's Regulatory Drive on Securing Forex Market Integrity

With the goal of safeguarding the integrity of the financial markets and protecting investors, the Reserve Bank of India (RBI) has recently intensified its efforts to crack down on unauthorised forex trading platforms. With the proliferation of online trading platforms, the RBI has observed a rise in the number of entities offering forex trading services to Indian residents, without the necessary regulatory approvals.

The RBI recently took a firm stance against unauthorised forex trading platforms by releasing a list of 75 entities, including prominent names like Alpari.com, Anyfx.com, Binomo, and Ava Trade. These entities were identified as neither authorized by the RBI to conduct forex dealings nor permitted to operate electronic trading platforms for forex transactions. In addition to this list, the RBI circulated an 'Alert List' featuring entities that offer or promote unauthorised forex trading facilities, further underscoring its commitment to safeguarding investors and maintaining the integrity of the forex market.

Governor Shaktikanta Das has been vocal about advocating for equitable treatment of retail customers in the forex market. He stressed the importance of transparency in pricing and advocated for finer pricing for smaller deals on the Negotiated Dealing System-Order Matching (NDS-OM). Expressing concern over the significant pricing differences between small and large customers in forex markets, Governor Das urged banks to promote the use of the FX Retail platform. Additionally, he encouraged greater participation of Indian banks in derivative markets, both domestically and offshore, while emphasising the need for banks to conduct thorough due diligence, assess risk appetite, and proceed cautiously to enhance and expand the participation of Indian players in rupee derivatives markets, both domestically and internationally.

As the RBI continues to intensify its efforts to crack down on illegal activities and promote regulatory compliance, stakeholders can be assured of a strengthened regulatory framework that fosters trust, integrity, and stability in the financial markets.