RBI Cautions Against Illegal Forex Trading Platforms

The Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday asked banks to enhance vigilance around banking channels being used by certain persons or entities to fund activities on unauthorised forex trading platforms. Speaking at the Fixed Income Money Market and Derivatives Association of India-Primary Dealers Association of India in Barcelona, Das said, “We continue to see banking channels being used by certain persons or entities to fund activities on unauthorised FX trading platforms. 

This warrants enhanced vigilance by the banks.”

A framework for authorisation of electronic trading platforms was put in place in 2018 to ensure that only entities adhering to a robust set of conditions, function in RBI-regulated financial markets. This framework is being updated in view of the recent developments in technology that have accelerated the electronification of financial markets. “Considering the complaints of cheating and fraud by unauthorised trading platforms, necessary cautionary advice has been issued against undertaking forex transactions on such platforms. An ‘Alert List’ of entities offering or promoting unauthorised forex trading facilities has also been issued,” said Das.

The RBI on November 24, 2023 released the names of 75 entities including alpari.com, Anyfx.com, Binomo, Ava Trade who are neither authorised to deal in forex by the RBI nor authorised to



operate electronic trading platform (ETP) for forex transactions. He also pitched for equitable treatment of retail customers with large customers in the forex market. “Transparency in pricing remains work in progress and more can be done. The retail customer is yet to get a deal at par with large customers. There is a need for effective market-making and finer pricing for smaller deals on NDS-OM.”

Das rued the fact that divergence in pricing in the forex markets for the small and large customers are wider than what can be justified by operational considerations. Banks may need to do more to facilitate the use of the FX Retail platform. Governor added that participation of domestic banks in derivative markets remains limited with only a small set of active market-makers. 

Participation of Indian banks in global markets is growing but it is quite small. He further said domestic banks are dealing with market-makers in global markets rather than with end clients and are yet to emerge as market makers of note globally. "Of course, banks need to do their own due diligence, assess their risk appetite, and then move forward carefully in this direction," Das said. He asked the players to focus on enhancing and widening the participation of Indian players in markets for rupee derivatives, both domestically and offshore, while being prudent.